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Persisting High Gas Burn Rates Amid Dark Spread Dynamics
VULCAN INSIGHTS
Building on our previous discussions, we continue to monitor the intricacies of power generation fuel choices, focusing on the recent observations of high natural gas burn rates. The current scenario is shaped by persistently unfavorable price spreads (dark spreads) in the PJM forward power markets, underscoring the need for strategic analysis and decision-making.
Vulcan clients can now track these evolving market dynamics with updated insights on natural gas and power generation.
Recent Observations
Overall Trends
The trend of high natural gas burn rates compared to historical levels shows no signs of diminishing, influenced by the current dark spreads in power markets. Despite these trends, coal inventories and individual coal unit counts with high inventory remain low, suggesting a cautious approach among coal generators.
Coal Production and Strategic Stockpiling
A notable year-on-year decline in coal production, over 10%, assist in moderating stockpiles. Coal generators will be increasing stockpiles as there is capability to do so vs. losing money in the power markets.
A notable year-on-year decline in coal production, over 10%, assist in moderating stockpiles. Coal generators will be increasing stockpiles as there is capability to do so vs. losing money in the power markets.
Looking Ahead
Vulcan Advantage
By utilizing Vulcan, you gain access to these valuable insights 2-3 months ahead of the release of official market data. This significant head start allows you to make informed adjustments to your gas demand forecasts from the power sector, giving you a competitive edge in the market.
