Energy Market Update

Drill down into how to optimize energy services.

November 2022

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

This time of year, temperature forecasts have a large influence on electric and natural gas prices.  A cool period in the 6- to 10-day forecast across the country will subside in the coming weeks to above-normal conditions by December.  Due to high market price volatility, any extended cold periods this winter would exaggerate spikes in natural gas prices. 

The natural gas market hit a low point on October 21st on high production, reduced demand with the warmer weather, and gas storage levels at adequate levels heading into the winter months. 

Concerns of natural gas shortages in Europe have eased as LNG imports increased.  Recent reports state that over 30 LNG cargo vessels are still waiting to unload.  This helped reduce the cost of gas in Europe from over $60 Dth to the current $30/Dth.     

Over the past few weeks, natural gas, and electric are trading in a range that invites more participation in longer-term contracts.  The EIA.gov Short Term Energy Outlook forecasts prices to average below 2022 at $5 to $5.50 per Thousand Cubic Feet (Mcf) throughout all of 2023.  (see chart below) If you haven’t fixed a rate for the winter months, now is a good time to do so.

This chart shows the natural gas NYMEX Futures historic to current market average strip prices.

Electric Market 12-month average prices for current and future years shown in the chart below.

Other Energy News: Diesel Fuel Shortage?

CLAIM: The United States is on the verge of running out of diesel fuel.

AP’S ASSESSMENT: False. While data from the Energy Information Administration shows that the U.S. has about a 25-day supply of diesel, the country will not actually run out of fuel soon, experts confirmed to The Associated Press. This figure doesn’t account for ongoing diesel production.

THE FACTS: As of Oct. 28, the most recent data available, the U.S. had 25.8 days’ worth of diesel in its stores — a lower supply than in previous weeks, according to the EIA. That figure, paired with still-high fuel prices domestically and a looming energy crisis in Europe, has some social media users suggesting that in less than a month, no diesel fuel will be available.

“Diesel is going to run out in weeks,” reads text in a TikTok video posted Sunday, as a large truck spewing exhaust from its hood drives past the camera. That clip had been viewed more than 125,000 times as of Monday.

“US sending another $400 million to Ukraine… By the way, we are about out of diesel fuel,” read a tweet posted Friday, receiving more than 4,000 shares.

Read the full article on the web at AP News.com

But this is a misunderstanding of the EIA data, according to agency spokesperson Jeff Barron. He explained that it accounts for current consumption without factoring in the oil that’s imported or produced by refineries, which refill supply.

Visit EIA.gov for Electricity Monthly Updates

Market Opportunity

12-month term contract rating is fair, while longer terms are good.  Recent pull back on natural gas prices is allowing opportunity to act.  Fixing a gas or electric rate will protect against winter spikes.  

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.

October 2022

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

Near-term temperature forecasts for the lower 48 states show warmer conditions to the west and cooler for the eastern high population areas.  This time of year, demand for natural gas used to generate electric is lower, thus allowing more to flow into winter storage.  EIA now projects that we will breach the 5-year average storage levels by late October or early November.   This could potentially keep our prices under control through the coming months.  LNG exports are still below full output capacity with the Freeport, Texas terminal closed due to a fire, and the Cove Point export terminal in Maryland under maintenance for a few weeks.  Due to this, natural gas winter storage additions are higher than expected.  

With Russian imports cut off, Europe is concerned that their heating season may consume what natural gas they have been able to store.  Gas inventory concerns will force commercial and industrial usage restrictions for the foreseeable future.  It will take time to build the needed infrastructure to import and re-gasify LNG that a few Middle Eastern countries have offered to provide.  For comparison, the price of natural gas imported to the UK is currently $34/Dth, the Netherlands $48/Dth, and had reached as high as $70/Dth in August.  The U.S has seen a high of just over $9/Dth.  This gives you an idea of the financial stress they are experiencing.

 OPEC will be reducing the production of crude oil by 2 million barrels per day starting in November.  We have seen this over the years during a low demand time, so this is not unusual, however this will affect refined gasoline prices at the pump for a while.  

This chart shows the natural gas NYMEX Futures historic to current market average strip prices.

This chart shows the natural gas NYMEX Futures historic to current market average strip prices.

Electric Market 12-month average prices for current and future years shown in the chart below.

The October natural gas trading month price was determined on September 28th, and settled at $6.868/Dth, down $2.485/Dth from the prior month.

Natural Gas Storage Update

The storage report for week ending 9/2/22 shows an injection into storage of 54 Billion Cubic Feet (Bcf).  This puts levels below the 5-year average by 11.5%, and 7.6% below last year at this time.  Current percentage of total capacity is at 62.6% at 2,694 Bcf.

The chart below shows the natural gas storage levels going back 24 months.

Market Opportunity

12-month term contract rating is fair, while longer terms are good.  Recent pull back on natural gas prices are allowing opportunity to act.  A short-term deal will bridge the upcoming volatile months we’ve been experiencing, and protect against winter spikes.  Look at locking in additional term starting late 2023 and beyond. 

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.

September 2022

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

Natural Gas storage levels are currently 11% below the 5-year average.  This supports higher energy prices here at home, however globally, there are two main market movers in the past couple of weeks. 

First, the Liquid Natural Gas (LNG) plant in Freeport, TX that had a fire in June, was originally scheduled to reopen in October.  This has now been pushed back to possibly late November. This fire reduced our LNG export capability, while conversely increasing our natural gas winter storage.  This additional gas directed to storage helps, but may not be enough to avoid the potential for even higher prices during winter.  

Secondly, the energy and economic crisis in Europe is getting worse.  Russia’s natural gas pipeline to Germany and other countries had been restricted to 20% flow, and recent blame on equipment failures have shut down the flow completely.  The cost of energy in Europe and the UK is far higher than here in the U.S. and business and residents are struggling to make ends meet. Manufacturing cutbacks and closures have reduced or slowed products we import from the EU.  This also impacts our energy prices by directing as much LNG as possible to the area, but also watching how the U.S. will respond regarding economic support for the UK.  Economic indications predict a possible recession in the UK that could begin later this year.    

Energy markets continue to be rocked by external forces such as the Russia/Ukraine war, global inflation, and societal focus getting away from fossil fuels.  The world, and U.S. in particular, have plenty of natural gas to meet the world’s energy needs.  It just needs to get out of the ground and to consumers.

This chart shows the natural gas NYMEX Futures historic to current market average strip prices.

Electric Market 12-month average prices for current and future years shown in the chart below.

The September natural gas trading month price was determined on August 29th, and settled at $9.353/Dth, up $0.666/Dth from the prior month. This is the highest we’ve seen since 2005 & 2008.

Natural Gas Storage Update

The storage report for week ending 9/2/22 shows an injection into storage of 54 Billion Cubic Feet (Bcf).  This puts levels below the 5-year average by 11.5%, and 7.6% below last year at this time.  Current percentage of total capacity is at 62.6% at 2,694 Bcf.

The chart below shows the natural gas storage levels going back 24 months.

Market Opportunity

Market Opportunity:  
Short term contract terms are poor, while longer terms have a fair rating.  Energy markets will continue to be volatile as we enter into the low demand time of year.  Longer terms will provide the best rates.  

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.

Natural Gas Storage Update

The storage report for week ending 10/4/22 shows an injection into storage of 79 Billion Cubic Feet (Bcf).  This puts levels below the 5-year average by 2.1%, and 1% below last year at this time.  Current percentage of total capacity is at 81.4% at 3,580 Bcf.

The November natural gas trading month price was determined on October 27th, and settled at $5.186/Dth, down $1.682/Dth from the prior month.

The chart below shows the natural gas storage levels going back 24 months.

Note: Our clients have the option of purchasing 100% of their electricity from renewable sources, such as wind and solar. Speak to your Edge Insights representative for more information.

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.