Energy Market Update-November 2018
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.
Winter Fuels Outlook
EIA forecasts that average U.S. household expenditures for most major home heating fuels will be higher this winter compared with last winter. Average increases vary by fuel; natural gas expenditures are forecast to rise by 5%, home heating oil by 20%, and electricity by 3%, while propane expenditures are forecast to remain similar to last year. Most of the increase reflects higher forecasted energy prices. U.S. average heating degree days are expected to be 1% higher than last winter. However, realized expenditures are highly dependent on actual weather outcomes
For additional information visit the EIA.gov website at the following link: Winter Fuels Outlook
The chart below shows the near and future years natural gas average 12 month pricing. The future years of 2020 and beyond have been stable and are good buying opportunities.
November’s market price settled on October 29th at $3.185/MMBtu, moving up 16.4¢ (5%) from last month and 29¢ (9%) since September.
Current Market Movers:
Bearish: (lower prices)
- Reduced demand for cooling during the fall season.
- El Niño weather pattern probability is now 70 – 75% for the upcoming winter, which is a slight increase from last month. If this pattern remains as forecasted, there is an increased chance of above normal temperatures across the northern tier of the country.
- Although gas production is at record levels for land based wells, the Gulf of Mexico’s off-shore production has declined steadily the past 17 years. To increase production and help storage levels rebound, 16 new Gulf of Mexico projects have been implemented and will be online by the end of 2019.
Bullish: (higher prices)
- Natural gas storage levels remain well below the 5 year average range, and a below normal temperature forecast has developed for November. This shot of colder weather does not have as much of an impact as if it would occur during January or February.
- Aside of El Niño’s effects, any extended period of below normal temperatures will deplete storage at a high rate. Constrained pipeline capacity forces Basis prices to jump up during these events. Consider locking in if you’re on a supplier variable month to month contract.
Price Stabilizer: (controls price range)
- Nuclear power plants maintenance is in full swing. Currently about 19% of total generating capacity is off-line. This percentage will decline as we move closer to heating season.
Natural Gas Storage Update:
The storage report for week ending 10/26 shows an injection of 48 Billion Cubic Feet (Bcf). This puts levels at 16.9% below the 5-year average by 638 Bcf, and 623 Bcf below last year at this time. Current percentage of total capacity is now at 71.9%. Injections over the past month were slightly below average.
Reducing US coal emissions through biomass and carbon capture would boost employment
by Staff Writers, Biofuel Daily
Washington DC (SPX) Nov 02, 2018
While the need for solutions for the impending consequences of rising global temperatures has become increasingly urgent, many people have expressed concerns about the loss of jobs as current technologies like coal-fired power plants are phased out.
A new study appearing November 1 in the journal Joule has run the numbers associated with the impacts of cutting coal plant jobs while at the same time employing techniques for bioenergy coupled with carbon capture and storage (BECCS).
The model indicates that the BECCS approach would not only retain 40,000 jobs currently held as part of the coal industry but would create 22,000 new jobs in the forestry and transportation sectors by the middle of this century.
Visit biofueldaily.com for the full article.
Mid to long term electric and gas contracts are fair. Because of the potential recovery of gas storage through 2019, long term is a better buy and should be considered if renewing contracts.
The market opportunity is a ranking of how we perceive timing of contract purchases for natural gas or electric.
Information provided by the Energy Division of Edge Insights, Inc.