Energy Market Update

February 2020

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.

Market Overview:

A continuation of above normal temperatures across the country has held natural gas and electric prices down.  Currently we see high demand for electric generation and Mexico exports, while LNG is experiencing a glut situation from a global oversupply.  Additionally, the economic impact from the coronavirus is slowing receipt of LNG to Asian markets. 

Natural gas is now trading below $2 on the NYMEX.  With low prices, well drilling activity will continue to decline, as we have seen over the past few months.  It is possible that these fundamentals will offer some support for prices later this year and into 2021, especially if colder than normal forecasts for next winter develop.  Of course, we’re all watching for the outcome of the election too.

The chart below shows the natural gas market.  The influence of above average gas storage levels are apparent.

This chart shows the 12 month average wholesale electric pricing on PJM Western Hub.

 February’s gas index price settled on January 29th at $1.877/Dth, down 28.1¢ from last month.

Natural Gas Storage Update: 

The storage report for week ending Jan 31st shows a withdrawal of 137 Billion Cubic Feet (Bcf), average for this time of year.  This puts levels at 8.3% above the 5-year average by 199 Bcf, and now 615 Bcf above last year at this time.  Current percentage of total capacity is at 59.7%. 

Energy news: UGI Utility Files for Proposed Rate Changes

UGI Utility, this past October, combined their territories on to one tariff, in conjunction with a price increase they requested in January of 2019.  These increases are critical to offset costs to maintain the safety and repair of aging gas utility delivery infrastructure.  

This latest proposed increase is for $74.6 million per year, which if the PUC agrees, will increase the delivery costs for residential customers by about 10%.  UGI is requesting a release date of 3/28/2020, but to allow time for the PUC to properly digest the request, schedule public hearings, run the calculations, etc… it may take about 6 months to reach a final decision.  Also, the PUC may not approve the full amount UGI is seeking.  We have seen these Rate Change filings being requested every year for the past 4 years, with this year being the largest. 

Market Opportunity:

The market buying opportunity for both gas and electric remains good.  The reason it’s not excellent is due to high Basis pipeline costs for gas.  This is causing the gas costs for most rate classes to be high, while the NYMEX market is at near historic lows.

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.

Note:  Reducing your kW demand is good for the planet and good for your bottom line.  Just knowing how much you consume and what your equipment uses, is an important first step.  For example; reducing your kW load on peak demand days will not only help the electric generators, but can save money on you electric bills. 

Benchmarking electric and gas consumption will let you quantify your energy efficiency efforts.  Talk to your Edge Insights account representative to learn how you can start a ‘Green Initiative’ program for your business.

January 2020

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.

Market Overview:

Above normal temperatures for December has held natural gas prices down for now.  This has caused the end of winter storage projections to be higher.  Map on right showing the only below average was in the extreme southwest, which has no effect on gas consumption.   

Demand for natural gas continues to grow for electric generation and LNG exports, but with low prices comes a decline in gas drilling rigs, and reduced production.  This will be the focus of investors looking towards the winter of 2020/21.  

The chart below shows the natural gas market.  The influence of above average gas storage replenishment and warmer conditions shows as prices declined steadily since early 2019.

This chart shows the 12 month average wholesale electric pricing on PJM Western Hub.

December’s gas index price settled on December 27th at $2.158/Dth, down 31.2¢ from last month.

Natural Gas Storage Update: 

The storage report for week ending Dec 27th shows a withdrawal of 58 Billion Cubic Feet (Bcf), lower than the average for this time of year.  This puts levels at 1.2% below the 5-year average by 38 Bcf, and now 484 Bcf above last year at this time.  Current percentage of total capacity is at 73%.  The chart below reflects the last storage report for 2019.

Energy news:

European LNG imports are at record levels this year  (Full Article at EIA.gov)

Europe’s imports of liquefied natural gas (LNG) have been steadily increasing since October 2018, and reached a new monthly record of 12.7 billion cubic feet per day (Bcf/d) in November 2019, according to the U.S. Energy Information Administration (EIA) estimates based on Bloomberg Finance L.P. tanker shipment data. This monthly record implies a 51% utilization of Europe-wide regasification capacity (including Turkey). From January through November 2019, LNG imports into Europe averaged 11 Bcf/d—the highest level for European LNG imports—surpassing the previous record of 8 Bcf/d (annual average) set in 2011. Lower spot LNG prices in Asia have narrowed the price differentials between delivering LNG to Asia or to Europe and have contributed to increased cargo shipments to Europe.

LNG imports into Europe have been relatively low in recent years. This year, however, spot natural gas prices in Europe declined to a 10-year low, providing incentives for increased electric generation from natural gas-fired power plants. Strong demand growth in the power generation sector combined with declining natural gas production in the United Kingdom and the Netherlands, required larger volumes of natural gas imports by both pipeline and as LNG.

Market Opportunity:

Because the overall market prices have remained in a lower range, the buying opportunity for both short and longer terms are good. 

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.

Note:  Reducing your kW demand is good for the planet and good for your bottom line.  Just knowing how much you consume and what your equipment uses, is an important first step.  For example; reducing your kW load on peak demand days will not only help the electric generators, but can save money on you electric bills. 

Benchmarking electric and gas consumption will let you quantify your energy efficiency efforts.  Talk to your Edge Insights account representative to learn how you can start a ‘Green Initiative’ program for your business.

December 2019

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.

Market Overview:

Influential market fundamentals of storage, production, exports, and coal to gas switching use for electric generation are currently stable.  Electric generation and exports are the fastest growing demand for natural gas, and production has kept up with this increase, for now.  This is an area of concern over the next year, as low gas prices have caused a reduction in the number of producing gas wells, down 35% since April ’19.

Prices for natural gas and electric are strongly influenced by temperature forecasts during the pending high consumption time of year.  Forecasts show a fairly normal winter with the occasional polar cold snaps.  The length of time temperatures are extreme determines how the market responds, generally with short term price spikes. 

Below is the expected heating degree days averaged over the continental U.S.  What we’re watching is accuracy for March.  This will indicate less demand during the end of winter, which will keep storage levels high.  EIA’s storage projection is further down this report.

The chart below shows the 12 month average wholesale electric pricing on PJM Western Hub.

Similar to the electric, this chart below shows the natural gas market.  The influence of above average gas storage replenishment shows as prices declined steadily since early in the year.

December’s gas index price settled on November 26th at $2.47/Dth, down 12.7¢ from last month.

Natural Gas Storage Update: 

The storage report for week ending Dec 6th shows the 4rd withdrawal of the season of 73 Billion Cubic Feet (Bcf).  This puts levels at .4% below the 5-year average by 14 Bcf, and now 593 Bcf above last year at this time.  Current percentage of total capacity is at 80.4%.  The next report is expected a larger withdrawal, possibly near 100 Bcf.

EIA.gov Forecasted natural gas storage levels for 2020 showing how a 10% variance of temperatures could affect storage levels.

Energy news:

Early December numbers are posted, and the average residential heating oil prices are down 18.4¢ on the East Coast versus last year to $3.022/gal.  Propane is also less, down 63.8¢ to $2.594/gal.

The Northeast is the only region EIA forecasts to see both lower prices and consumption in the winter of 2019–20, forecasting a 9% decline in household natural gas expenditures compared with last winter. In the West, forecast decreases in consumption offset forecast increases in prices, leading to a 2% decrease in expenditures. In the South and Midwest, EIA does not expect consumption declines to fully offset price increases, leading to expected increases in expenditures of 4% and 1%, respectively.

See full article at https://www.eia.gov/petroleum/heatingoilpropane/pdf/winterfuels2019.pdf.

Market Opportunity:


Because the overall market prices have remained in a lower range, the buying opportunity for both short and longer terms are good. 

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.

Note:  Reducing your kW demand is good for the planet and good for your bottom line.  Just knowing how much you consume and what your equipment uses, is an important first step.  For example; reducing your kW load on peak demand days will not only help the electric generators, but can save money on you electric bills. 

Benchmarking electric and gas consumption will let you quantify your energy efficiency efforts.  Talk to your Edge Insights account representative to learn how you can start a ‘Green Initiative’ program for your business.

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