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2004/05 Winter Energy Market Assessment November 18, 2004 Federal Energy Regulatory Commission • Office of Market Oversight and Investigations Disclaimer: This Report contains analyses, presentations and conclusions that may be based on or derived from the data sources cited, but do not necessarily reflect the positions or recommendations of the data providers.
OMOI’s Winter Assessment: Market’s behavior is consistent with commodity markets under tight conditions • Supply Adequacy • Status of Trading • Infrastructure • Electric Markets
Uncertainty and Supply Tightness Appear to be Driving Markets Henry Hub Nov04-Mar05 Winter Strip Henry Hub Prompt Month Futures Price Henry Hub Spot Prices on ICE
How has the supply and demand balance changed since last winter?Weather is key.
Alternative Fuel Prices Have Moved Farther and Faster than Natural Gas Natural Gas New York No. 2 Fuel Oil No. 6 Fuel Oil Crude Oil
Speculative Trading Appears Less Significant Than Supply and Demand Conditions Short Commercial Position Long Commercial Position Short Non-Commercial Position Long Non-Commercial Position
Regional Markets, Especially the NE, Could See Price Increases With Severe Weather Pipeline Capacity Use during Peak Conditions on January 14, 2004 Reflected a Variety of System Factors
Maritimes 75% Portland 89% Iroquois 73% ISO NE NY ISO Tennessee 95% Algonquin 99% Texas Eastern 92% Transco 94%
Work with public utility commissions to help them protect customers as prices flow from the wholesale to retail markets Monitor gas market activity including pipeline capacity utilization and regional prices FERC’s OMOI Will Continue to Monitor Market Drivers Closely This Winter • Assess status, quality of and market reaction to natural gas storage data • Monitor winter electric market behavior • Pay particular attention to unexplained price movements and market activity around extreme weather