Even though wholesale natural gas and electricity experienced increased volatility during January’s cold snap, prices came back down to winter lows as temperatures later moderated. In the recently presented, “Q1 Energy Market Update: 2017/2018 Winter Update” webinar, we examined the major market drivers and shared our outlook for the remainder of this winter and beyond. Here are a few of the key takeaways from the presentation:
1. Winter weather has varied across the U.S., with the West experiencing record warmth and the East experiencing a wide range of frigid to moderate temperatures.
La Niña has certainly played a role in this winter’s weather patterns. The Southwest had the warmest November through January period in 123 years, which negatively impacted snowpack levels and raised concerns for summer hydro output. Meanwhile, after the East endured frigid temperatures during January, February temperatures were much above-average and reduced energy price volatility.
2. With natural gas production running at an all-time high, supply will likely outpace demand during the year, despite increases in demand growth.
After bottoming out at 75.5 Bcf per day in January 2017, total marketed production steadily climbed to 83.5 Bcf per day a year later and is expected to climb above 90 Bcf per day in 2019.
3. Although real-time electric prices in the Northeast soared during January’s cold snap, a shift in weather patterns helped avert another month of higher prices.
Natural gas demand hit a record 150.7 Bcf on January 1, 2018 and constrained pipelines in the Northeast. However, price spikes were lower than the Polar Vortex due to market rule changes and winter preparedness actions enacted by ISOs.
For more information, I invite you to watch the webinar recording. Our new Energy Price Hub is also a great resource to help you stay informed and get the latest updates on energy prices and market intelligence.