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Suez Weekly Market Monitor

Derek Mumford
Derek.mumford@suezenergyna.com
November 15, 2006

ERCOT Power

ERCOT prices made a slow climb in the early week, but prices soon began to slump as the market fell following the NYMEX. ERCOT Prompt month deliveries closed at $54.56/MWh, increasing $0.16/MWh or 0.29%. Prompt month prices remain down from 3 months ago by a difference of 22%. ERCOT ‘08 finished the week at $73.26/MWh up 0.15%. ERCOT ’09 closed the week at $70.10/MWh up 0.68%. The prompt month for the Houston Zone finished at $57.56/MWh an increase of 0.28% and the prompt month North Zone finished at $57.56/MWh down 1.46%.

NYISO—NEPOOL Power

Northeast power curves saw the same trend as ERCOT with prices having a slight gain in the early week and tapering off late week.
Prompt month prices for the Northeast are 14% to 22% less than 3 months ago for the same trading month.
NYISO Zone J prompt month closed the week at $86.53/MWh increasing $0.58/MWh a change of 0.67%.
NYISO Zone A prompt month finished at $65.78/MWh again of $1.08/MWh or 1.64% Massachusetts NEMA prompt month closed up at $84.93/MWh a change of 0.86% or $0.73/MWh.
Massachusetts SEMA prompt month finished the week at $75.93/MWh, increasing 0.96%.

PJM Power

PJM power prices saw very small moves in the eastern zones with conflicting trends in the western zones.
Cinergy prompt month finished the week at $53.68/MWh, a change of 1.36% increasing $0.73/MWh.
NI Hub prompt month finished down $0.87/MWh to close at $54.93/MWh, a change of 1.58%.
PJM West Hub prompt month gained $0.23/MWh closing at $63.68/MWh, a change of 0.36%.
PSEG prices for the prompt month closed at $69.68/MWh, a change of 0.33% or $0.23/MWh.
Compared to 3 months ago, PJM prices are 4% to 21% less for the same trading period.

Natural Gas Market

atural gas prices started on an unsteady climb, but fell of and closed down from last week.
NYMEX prices for the prompt month finished the week at $7.79/MMBtu a decrease of 1.15% or $0.09/MMBtu.
December 2006 prices are 22.94% lower than 3 months ago for the same delivery period.
NYMEX Cal. ‘07 closed at $8.15/MMBtu a change of 1.16%, down $0.09/MMBtu.
NYMEX Cal ‘08 finished the week at $8.35/MMBtu; NYMEX Cal ‘09 closed at $7.99/MMBtu.
Algonquin, Transco Z6, and Tetco M3 prompt month closed at $1.50/MMBtu, $1.64/MMBtu, and $1.09/MMbtu respectively.

Natural Gas Storage: Gas in Storage Declines 7 BCF

Working gas in storage was 3,445 Bcf as of Friday, November 3, 2006, according to EIA estimates.
This represents a net decline of 7 Bcf from the previous week.
Stocks were 225 Bcf higher than last year at this time and 246 Bcf above the 5-year average of 3,199 Bcf.
In the East Region, stocks were 74 Bcf above the 5-year average following net withdrawals of 10 Bcf.
Stocks in the Producing Region were 116 Bcf above the 5-year average of 894 Bcf after a net injection of 2 Bcf.
Stocks in the West Region were 56 Bcf above the 5-year average after a net addition of 1 Bcf. At 3,445 Bcf, total working gas is above the 5-year historical range.

(Source: EIA)

Oil Declines Because Warm U.S. Weather Reduces Heating Demand

Crude oil fell as mild weather in the U.S., the world's largest energy consumer, reduced demand for fuel to heat homes and businesses.

Heating demand is expected to be 65 percent of normal this week in the U.S. Northeast, where most of the country's heating oil is consumed, forecaster Weather Derivatives said. U.S. crude oil inventories rose 435,000 barrels to 334.7 million in the week to Nov. 3, according to the Department of Energy. The change left stockpiles 11 percent higher than the five-year seasonal average.

“Mild weather and bearish stockpiles” are causing today's price decline, said Christopher Bellew, a broker with Bache Financial Ltd. in London.

Crude oil for December delivery fell as much as 96 cents, or 1.6 percent, to $58.63 a barrel on the New York Mercantile Exchange. The contract traded at $58.93 at 2:17 p.m. London time. Brent crude oil dropped 56 cents to $59.15 a barrel on the London- based ICE Futures exchange.

Part of the decline is “a continuation of Friday selling; the funds are dipping the market,” Bellew said. Oil plunged 2.6 percent on Nov. 10 in New York.

Temperatures in the U.S. will be 2.7 percent above the seasonal average and 6.5 percent higher in the Northeast on average from Nov. 11 to Nov. 17, according to Weather Derivatives. The mean temperature in New York City was 58 degrees Fahrenheit (14 Celsius) at 8 a.m. today; the normal mean is 48 degrees.

The U.K. also is experiencing warmer-than-normal temperatures. Maximum temperatures in London this week could rise to 16 degrees Celsius (61 Fahrenheit) on Wednesday, according to Meteorological Office data on its Web site.

Heating Oil Drops

Heating oil fell as much as 1.97 cents, or 1.2 percent, to $1.6769 per gallon on the New York Mercantile Exchange and traded at $1.6789 at 2:20 p.m. London time.

“We've had a mild start to the winter,” said Tobin Gorey, commodity analyst at Commonwealth Bank of Australia Ltd. in Sydney.

World oil demand peaks in the fourth quarter when refiners make heating fuel for winter in the Northern Hemisphere. At the same time, the Organization of Petroleum Exporting Countries is reducing production.

State-owned Saudi Aramco is reducing shipments after OPEC agreed last month to cut output by 1.2 million barrels a day from Nov. 1 to stem a slide in prices. New York-traded crude has dropped about 25 percent from a record of $78.40 a barrel reached July 14.

OPEC Vigilance

“We don't think we will move far from $60 a barrel this week,” said Jakob Schoechli, an oil analyst at Bank Leu AG in Zurich. “If it falls below $60, the Organization of Petroleum Exporting Countries will take further steps at the next meeting in December.”

The OPEC crude oil basket price rose 16 cents to $56.57 a barrel on Nov. 10, the group said in an email. The price is a weighted average of 11 crude blends produced by OPEC nations.

Saudi Arabia, the biggest OPEC producer, sells at least half of its oil to Asia. The kingdom will cut output by 380,000 barrels a day under OPEC's accord.

Japanese refiners such as Cosmo Oil Co. and Idemitsu Kosan Co. will receive 5 percent less than contracted volumes, refinery officials said, citing notices from Saudi Aramco. They asked not to be identified because of confidentiality agreements.

South Korean refiners were notified by the Saudi company that they will get 5 percent to 6 percent below contracted volumes in December.

(Source: Bloomberg)

 

Derek Mumford
Energy Analyst
Suez Energy Resources
Derek.mumford@suezenergyna.com
November 15, 2006



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