Good Morning,
Lots of news for a Friday, we usually call this post the “Friday Update” which means you probably can skip it. When we Title it “Timberrrrrrrrrrrrrrr!” you might want to read it, then again, you may not want to if you are long.
Let’s start with the weather, as in the precip forecast, because therein lies the news of the day, though it should not really be new news, we’ve been spouting off about a possible big rain event to hit the northwest for a week, now it looks like it is increasingly certain it will hit … AND …. it is growing in intensity. All this from a free weather service, gotta love it.
The cumulative 10 day has grown 500% since last week, has increased 20% since Tuesday, and has even grown from yesterday’s forecast. Two inches, so what you say …don’t say it, check out the station level table:
Five and a half inches of rain in ten days in Seattle, nearly five in Portland, and even the east-side gets drenched … 1.5″ in Kalispell where most of that will come down as snow …. Big Mountain anyone?
When does it come down? There are two events, let’s examine Portland:
It is raining as I blog (Seattle) and will deliver nearly an inch over the next 24 hours but the big one, a potential record setting event for mid-October, starts next Wednesday and runs through Monday the 17th…. six days of pain, if you are long.
That is the west side, it won’t really matter, right? Not according to your friends in Portland, they seem to think otherwise:
You can be pretty sure the RFC is now putting this storm in their models, you can be pretty sure they will put the storm into next Monday’s STP, you can be pretty sure a lot of SLICE clients are going to find themselves longer BOM, you can be pretty sure a lot of west-side hydro-owning utes are going to find themselves a lot longer, you can be pretty sure a lot of those utes are going to be looking for a BOM Bid to Bop, you can be pretty sure it wont be Ansergy showing that BOM Bid. Will it be you?
We are already seeing the Willamette rally:
Perhaps this is just an evacuation in anticipation of the flood though this recent spike (last few days) looks to be natural river flows … you can expect the Willamette to approach 50k over the next few weeks; you should also expect all of the west side production to approach hydrolic capacity as well. East side, not so much, systems like the Spokane will rally but much of it will be caught in the reservoirs which only bodes poorly for Nov-Dec, perhaps for the entire strip.
Loads
SP is off 8000 MW and that pain is not over, temperatures are plunging; MidC didn’t drop, how could it? This is the bottom, rock bottom, for northwest loads, all they can do from here is climb into the winter heating seasaon but temperatures aren’t going to support that move just yet. This storm is more pineapple than siberian.
Weather Forecasts
We already looked at Portland, its lows are ten degrees above normal which will lead to very little change in current loads.
We have taken a shining to this red-headed step child of a hub of late, still are liking its positive degree day anomalies which are worth 1000-2000 MW of incremental peak demand, plus that nuke has to come down soon (PV3).
From mid 90s to normal, as in mid 70s, as in no load.
Sacramento, CA
Current forecast is several degrees cooler than Wednesday’s and after this weekend’s rally will be several degrees cooler than normal. No AC load in the state’s capital for next week, no hope for NP15 either.
Generation
No new ISO outages and no new returning plants. The renewable outlook is neither bullish or bearish, just normal. PV3 dropped 1% day on day, we think it goes down this weekend for the refueling.
Gas Noms – Hub Totals
Palo is showing a small rally in noms and it may rally more going into its positve degree day anomalies, the rest of the hubs should fall off as loads drop and precip accumulates.
Big rally in spot yesterday and the cash spread between Socal and PG&E tightens, just as it has every time LA heats up. We still think that spread may be due for some additional tightening as PG&E is close to full and Socal can’t inject.
PG&E is at 95bcf today, ahead of last year by 1bcf; there is no core demand and what electric demand the hub has is going to fall off in sympathy with weather. Socal is still injecting though that can’t sustain itself forever, but nor can the term gas spreads, in our opinion:
Two weeks ago we proposed selling the outside shoulders and buying the inside for both the Dec-Nov and Mar-Feb – both trades are in the money $0.02 to $0.03 but we think those rolls are poised to collapse closer to $0.20, more off of bearish NP than bullish SP. We’ll double down on both of those trades.
Conclusions
- BOM
- Mid-C
- No decision here, Selling ourselves shorter than we already were
- SP
- Selling our length into a short postion
- Palo
- Buying more, but not enough to make us net long BOM, want to be net short
- Mid-C
- Nov
- Mid-C
- Short
- SP
- Short
- PV
- Long
- Mid-C
- Q1
- Mid-C
- Short
- SP
- Long
- Mid-C
- Q2
- Mid-C
- Short
- Palo
- Long
- Mid-C