Energy Market Update

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.

November 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:

During the transition from cooling to heating season, there’s usually not a lot to review. If the fundamentals are stable, weather is the main price driver.

The current cool down encompassing a good part of the country has pushed natural gas and electric market prices up, however this time of year, the impact is not as severe as if this were to happen during the months of Dec through Feb.  Extended forecasts are showing a warm up three weeks out, that may last well into mid-December.  Gas storage will be near the 5 year average as we start the heating season, and if we avoid extreme cold periods, storage levels in spring will contribute to the bearish market sentiment we have seen throughout most of 2019.  Some experts are concerned about production slowing due to the low prices, while exports continue to grow.  The ebb and flow of supply and demand will certainly come into play at some point, possibly late ‘20 into ‘21.

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

The chart below shows the natural gas market.  A quick run up on weather as mentioned above, with continued volatility, however we have yet to see the average strip move above $2.60/Dth since June of this year.

October’s gas market price settled on October 29th at $2.597/Dth, up 16.9¢ from last month.

Natural Gas Storage Update: 

The storage report for week ending Nov 1st shows an injection of 34 Billion Cubic Feet (Bcf).  This puts levels at .8% above the 5-year average by 29 Bcf, and now 530 Bcf above last year at this time.  Current percentage of total capacity is now at 85.3%.  The next report may show the first withdrawal, a week or two earlier than originally anticipated.

Energy news:

UGI Utility has issued a new tariff on October 11th for natural gas.  One of the changes that will affect medium size Delivery Service rate accounts is how they will price the Capacity Charge.  Another major change is the potential for usage to be constrained during extreme cold events.   We have been evaluating our clients’ accounts, and if necessary, suggesting changes if needed.

UGI has been sending additional notices to their DS and LFD rate customers expressing that there is a higher potential for requests to constrain usage this winter.  Because of recent pipeline failures, extensive pipeline safety inspections are taking place.  These inspections have caused reduced gas availability in a large portion of UGI’s territory.  It’s not clear when the inspections will be completed, but early estimates suggest they will continue into the latter half of winter.

Market Opportunity:

The market buying opportunity is good.  Gas and electric markets both continue to trade low, but volatility has increased for both energy markets.  

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. 

Also, 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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