Energy Market Update-December 2017
Edge Insights energy experts are constantly monitoring energy market conditions in order to help ensure the best possible pricing and contract terms for our clients. The following report is a snap shot of current conditions intended to help our clients stay informed of market dynamics.
Natural Gas Market Overview:
After a couple of weeks of lower heating demand, natural gas prices declined. There is a balance of increased production and exportation, which reduces these fundamentals from affecting the market, however winter temperatures will continue to be the driving force of price movement.
Natural Gas Storage Update:
The storage report for week ending 12/1 shows an injection of 2 Billion Cubic Feet (Bcf). This is 1% below the 5-year average by 36 Bcf, and 264 Bcf below last year at this time. Current storage levels are now at 84.5% of total capacity.
Current Market Movers:
Bearish: (lower prices)
- Natural Gas production over the next few months is estimated to be 7.6% above last year.
- Storage levels starting off December with an increase. This will affect the expected storage levels at the end of winter.
Bullish: (higher prices)
- Short term; 3 to 4 week forecasts show an increased heating demand across the high population areas of the northeast, with warmer conditions to the west. (outlook map on right)
- The overall average temperatures for the upcoming winter are expected to be colder than the previous two years, while still remaining just below the 10 year average for January and February. (chart below)
Electric generating plants scheduled to open in the next year show natural gas as the dominate fuel source with a large growth of wind turbines in the heartland. (see chart below) 1Wind turbines accounted for 8% of the operating electric generating capacity in the United States in 2016, surpassing hydropower as the renewable technology with the largest installed generating capacity.
Coal generation continues to decline, down 10% from January to September after a slight increase during April through July. Four 500 MW or larger coal generating plants are schedule to close in the next 12 months.
Other Related News:
In August 2017, total U.S. natural gas liquefaction capacity in the Lower 48 states increased to 2.8 billion cubic feet per day (Bcf/d) following the completion of the fourth liquefaction unit at the Sabine Pass liquefied natural gas (LNG) terminal in Louisiana. With increasing liquefaction capacity and utilization, U.S. LNG exports averaged 1.9 Bcf/d, and capacity utilization averaged 80% this year, based on data through November. Above chart and transcript from the Energy Information Administration.
The market opportunity is a ranking of how we perceive timing of contract purchases or hedging natural gas or electric.
1 Information provided by the EIA.gov. Follow link for more details.
Information provided by the Energy Division of Edge Insights, Inc.