Energy Market Update
Edge Insights energy experts are constantly monitoring energy market conditions in order to help ensure best possible pricing and contract terms for our clients. The following report is a snap shot of current conditions that is intended to help our clients stay informed of market dynamics.
Natural Gas Market Overview:
The lower 48 states temperature and storage levels are what affects the market pricing. The 12 Month average price is trading well above 2018 and beyond. Once temperatures moderate towards spring, a decline is expected, but will have resistance from increasing demand.
Natural Gas Storage Update:
Natural Gas storage levels are now above to the 5-year average by 2.2%, but 8.9% below last year. Gas storage level is currently 2,711 Bcf, or 62.4% of capacity. The withdrawal of 119 Bcf for week ending 1/27 is small as a result of reduced heating demand.
Current Market Movers:
- Colder temperatures are expected for a period in mid-February affecting the north central to northeastern U.S. However, the overall average temperatures are above normal for February. (Clipping on right from Tropical Tidbits)
- If the new administration allows more coal mining, and this becomes the primary fuel for electric generation this summer, it will help gas storage builds for next winter.
- Increases in production are slowly being seen with more oil & gas wells opening.
- Demand increases for LNG and Mexico pipeline gas exports.
- Gas production continues to be below last year at this time by 2.5 Bcf/day.
- Some analysts are predicting rising prices through 2017 due to insufficient production. The question is whether enough wells come back to stave off the demand this summer.
- First Energy selling 4 plants in PA as part of an ongoing drive to exit competitive power generation markets. The buyer is LS Power Equity Partners III.
- On January 19th, 2017 the Pennsylvania Public Utility Commission approved base rate case settlements for multiple utilities that will help support and build on the significant service reliability enhancements. The approved rate plans for each utility are expected to benefit customers by continuing infrastructure projects, including circuit and substation upgrades and pole replacements, along with additional vegetation management and equipment replacements. The new rates will become effective on January 27, 2017. The increase for an average residential customer will be approximately 11 percent. The increase for an average commercial/industrial customer will be approximately 3 to 4 percent. Edge Insights will be checking the actual numbers as the February billing become available.
The market opportunity is a ranking of how we perceive timing of contract purchases or hedging natural gas or electric.
Information provided by the Energy Division of Edge Insights, Inc.