RD Energy Newsletter: September 2017

September 2017 Energy Market Update

Key Drivers

  1. Hurricane Harvey has caused loss of Gulf of Mexico and Texas Shale production
  2. Cool Midwest and Northeast in August and September is keeping wholesale prices stable
  3. Natural gas production versus total demand: NG storage + exports + industrial use + electric generation will continue to drive wholesale prices

Commentary

Hurricane Harvey caused a loss of  off shore production in the Gulf of Mexico as well as Shale gas on shore.  The extent of the Shale loss is not yet known.  However, abnormally cool temperatures in the Midwest and northeast coupled with the cooling brought on by Harvey in the southwest has kept wholesale prices for natural gas and electric very stable.  Wholesale prices are trading in a very tight range as they have since April.

Some experts believe that the natural gas wholesale market is trading like we’re already in the shoulder months of the year.  Over the next few weeks and couple of months we will watch closely at non-weather related items we’ve discussed in our past newsletters: natural gas production levels, LNG export levels, and industrial demand. The final natural gas storage levels in the ground at the end of October will also be important to watch.  This summer, natural gas production has shown no indication that it could have kept up with all the storage, export, industrial and electric generation demand if we had seen the hot temperatures in the Midwest and Northeast as forecasted earlier in the year.   Now the focus begins for how all the production versus demand pieces fit together as we head towards next winter.

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