Commodity Market Report
Midwest power markets short-term outlook December 2014
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Report summary
Last winter, weather driven demand drove higher average natural gas prices across North America. This year, higher pricing and reliability challenges look to be less of a concern, as coal supply limitations look to be regionalized. Lower natural gas prices and coal retirements needed for MATS compliance promote more natural gas generation. Additionally, inter-regional gas on gas competition will ultimately provide an increase in market share for generators in the highest priced gas markets.
Table of contents
- Executive summary
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Supply
- Strong winter demand intervals needed to provide upside to natural gas pricing
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Natural gas pricing
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- Winter natural gas withdrawal rates to rise as weather driven demand should outpace a mild December
- Current level of low oil prices to slow natural gas supply growth in 2016
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Coal pricing
- Marcellus and Utica natural gas production continue to put the squeeze on coal demand with international markets failing to offer support
- Below average stockpiles may limit coal market ability to respond to any natural gas price and power demand volatility this winte
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Coal-to-gas switching competition
- Fuel supply inadequacies limited to regional markets
- NERC generation balances defined by system retirements and coal-to-gas substitution levels
- Figure 1: NERC wide generation balances 2015-2016
- Figure 2: Forward natural gas price sensitivity
- Sensitivities highlight potential natural gas market share
- Regional coal to natural gas demand curves and market share impacts
- Figure 3: Natural gas power generation sensitivity to natural gas prices
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- Scenarios and sensitivities
Tables and charts
This report includes 4 images and tables including:
- Scenarios and sensitivities: Table 1
- Supply: Image 1
- Supply: Image 2
- Supply: Image 3
What's included
This report contains:
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