Good Morning,

The market is on a tear/terror, heading towards lofty heights not seen since last summer/fall. Gas is helping, that market is on a roll too:

We like to delineate the Pre-Trump era from After-Trump, kind of like history has done with the Jesus and the BC AD delineation; let’s call it PTAT, or for some, maybe call it PTSD. Regardless of what name you apply, we all can agree it has been bullish for gas. Now it is bullish for power.

Going forward this blog will focus on the BOM markets since this is a fundy update. We still monitor term markets via our Trade Rank product, but our posts in this blog will be limited to BOM as it is the most impacted by changing fundy’s. Perhaps will resurrect an old idea we had about doing a Term Post, for now it’s a Fundy Post.

Here is a look at today’s BOM Markets (these are all new dashboards and available under “Ansergy Dashboards”:

We like this approach because we believe all the markets are intertwined and it is important to see the derivatives as well as the outrights. Take SP, massive rally in the BOM (not as big as Palo, though), but you don’t get the full gist of the surge until you look at the roll to May. There you see the mirror image, a crash. Why?

There is no reason; it’s a market blunder. You get the point; we don’t believe you can adequately address opportunity without looking at the entire picture which requires looking at each derivative. There isn’t space in this blog to post on every market, so we will restrict our focus going forward to BOM (and typically drop BOM and switch to Prompt around the 23rd).

More on the markets at the end just wanted to announce this change.

Demand

The Mid-C loads have fallen below last year’s levels for the first time in weeks yet remain higher than last week. Palo loads have now surpassed last year and will rally early next week, then fall off. SP loads are up, week-on-week, and will rally off of warming weather next week.

The radical cut on the 20th at Palo caught our eye; that is an 11-degree hair cut from a few days back. The early part of the week looks healthy, then not so much. Given the wild rally, it might be a good time to take some profits.

This is a generally bullish forecast for California; both NP and SP will see some warmer weather next week. Not hot, but loads should rally.

The Northwest warms up, too, but its loads will decay, not build. The 72-degree day in Spokane caught our eye; that will be the warmest day since early October. Loads won’t like that lovely day, and the rivers will grow angry. The 26th is a long ways away and not very reliable but worth making a mental note that you won’t want a lot of length if that temperature holds, or builds. If it does, and you hold that MidC length, you run the risk of making your risk manager angry.

Hydro

California mean reverts to dry, just like the good old days. It seems the wet trend has broken, but there is still a proverbial mountain of snow to work through, something that will last through July.

The Northwest dries out a bit, still an inch over the next ten days in the producing basins. We also have been watching the 14-21 day and see a large storm that refuses to leave the forecast. This one looks to be 1.5″ to 2″ in the zones where you don’t’ want it (if you’re long).

Warmer weather and some rain are driving up flows on most basins. Look at the Sacramento that is regulation, the operators are spilling in anticipation of more inflows; probably seeing the mid-80s in Sacramento and saying “Oh Shyte.” The kayakers are going to love this spring.

We had to deploy Dual Annotations on Coulee this morning. The red box highlights the QG cuts to 140kcfs; then the red circle points out the shaping that took place yesterday.

We’d like to say all of those spikes were during HL hours, that is our hope given our long May LL, but sadly that last one happened on HE 1 this morning. These bursts are more indicative of too much water, and BPA’s plans of holding gen discharge at 140kcfs are under attack from high inflows.

The other rivers, non-COE, are a mixed bag; some are up, some are down. Warmer weather will drive them all up. A better measure of natural river flows are the side flow indexes:

These are all trending up, and we’d expect them to be soaring next week, all of which makes us squeamish over any MidC Length.

Meanwhile, it is April 14, and we see builds on several basins, more squeamishness.

TransGen

Flows on the AC approached a 60 day high; BC continues to sell into strength, and ZP is sending its surplus north, reflective of SP weakness.

SP gas outages are still creeping up while ZP and NP are mostly sideways.

Conclusions

It’s a lot easier to love something that is hated by all; when it’s loved by all, we struggle to love it all. Let’s look at the love fest happening in BOM:`

It’s a veritable orgy of goodwill and high fives, every hub is up.

Palo – Seems like a short with cash clearing north of 10k heat rate and not all of the Palo gas units are back on line, We also see a cooler forecast than what we witnessed last week. Cautious as we are, we won’t outright short it, we’ll buy the roll and get paid about $3.00:
- - The dang thing is trading at contract lows, and we know a few facts that suggest these are stupid levels
    - Avg temp in May > April – that is a fact, and we’ll bet on that for size with anyone
    - Nuke will be out for first few weeks of May
  - SHORT APRIL, LONG MAY
    - for both HL and LL
SP15
- Check the spread to Palo out:
  - - Contract low, and we think the Demand Spread widens next week, not collapse.
  - LONG SP|PV
    - Both HL and LL
MidC
- We see decaying loads and possibly surging stream flows; we also see signs that BPA’s cut to 140kcfs at Coulee may be short-lived. All good things come to an end (or is to she who waits?)
  - How much of that rally is a short-squeeze?
  - The On: Off is at a contract high, we’ll short that and be ready to turn it naked when we get confirms on that Spokane 70s.
    - HL – Short
    - LL – Long