Rd Energy Newsletters & Blogs
Key Drivers On 8/3/2020 Natural gas NYMEX jumped around $.32/MMBTU 2021 NYMEX 12 month strip trading at about $1.00/MMBTU higher than 2019 settlements so far January 2020 NG NYMEX closed at $2.158/MMBTU. January 2021 is trading at $3.023/MMBTU Weather temperature forecasts revised up warmer than normal for next few weeks Natural gas production in the U.S dips LNG activity shows an increase as global demand starts to slowly recover and September LNG shipment cancellations
Key Drivers Short-term (1-2 months) natural gas supply versus demand: Oversupply 2-6 months: stronger natural gas demand vs lower NG production LNG: short-term demand weakness vs increases in the coming months with Asian and European demand growth Warmer than normal July forecasted: high natural gas consumption in electric generation Natural gas storage: Current levels above 5 year average – likely to drop U.S. economy energy demand: How fast or how long will it take to
Key Drivers Natural gas storage levels LNG shipment cancellations Natural gas production cuts Oil price increases that could lead to the increase in natural gas production The arrival of the AC season in the Midwest and northeast COVID 19 Bull & Bear speculator traders: fighting for price trend supremacy Commentary It’s worth repeating; we’re in uncharted waters in regards to the global and domestic forces pushing and pulling natural gas and electric prices.
KEY DRIVERS Worldwide Pandemic Sudden drop of global oil demand Extremely high levels of global oil in storage & oil well shut-ins Oil well associated natural gas production shut-in too US. natural gas storage levels currently 19.5% higher than the past 5 year average Rigs drilling natural gas only have dropped around 34% so far in 2020 Well completion crews in some areas like the Appalachian area have dropped nearly 80% on wells only producing
Key Drivers Extremely high U.S. natural gas storage levels The Russia-Saudi war over oil production market share COVID-19: Rapidly plunging global energy demand Rapidly reduced oil & natural gas production budgets Commentary The winter that wasn’t. The winter of 2019/2020 will likely end up as one of the warmest on record. Last Thursday the EIA Natural Gas Storage Report showed U.S. natural gas levels in storage 80% above 1 year ago and 17% above the
Key Drivers U.S. Natural gas storage levels week ending 2/21/2020 reflects levels 41% above one year ago levels It looks like the 2019/2020 season will end as the warmest winter ever recorded worldwide The first 3 weeks of March are forecasted to be well above normal temperatures When will U.S. production drop due to reduced drilling and shut-in wells? How will the coronavirus affect LNG exports to Asia – United States’ largest LNG market? Will
The energy efficiency programs behind the Ohio utilities FirstEnergy and AEP are going away January 1, 2021 due in great part to the passing of House Bill 6, often referred to as the “First Energy Solutions Nuclear Plant Bailout”. As a result of the State of Ohio Legislature’s passing of HB 6, Ohio’s businesses with kwh usage greater than 700,000 kwh/year can choose to opt out of paying the for the Energy Efficiency and Peak
Key Drivers Warmer than normal December, January and February (forecast) Record high number of speculative short trades on NYMEX natural gas NG storage: 23% surplus vs 2019, 9% surplus vs 5 year average Late winter rally? Commentary Natural gas NYMEX is trading for the next few months at levels not seen since early 2016. The primary reason is the warm December and January in the Midwest and Northeast. The first half of February is forecasted
Key Drivers 1. Warm weather in the Midwest and Northeast 2. Over supplied natural gas markets both domestically and globally 3. U.S. LNG exports competing for Europe demand with Russian production Commentary The Midwest and northeast have seen well above normal temperatures since mid-December. Forecasts show these warm temperatures will continue until at least mid-January, which is keeping wholesale prices very soft. Along with low wholesale natural gas prices is wholesale electric prices. If you
Key Wholesale Market Drivers Strong U.S. Natural gas production Full natural gas storage level heading into winter Colder than normal November followed by expected warmer than normal December Colder than normal January – February 2020 expected When will the natural gas supply versus natural gas demand gap start to lessen? Commentary November 2019 was nearly a repeat of November 2018 in regards to the temperatures being below normal through much of the country. Similar
Key Wholesale Market Drivers Colder than normal temperatures through at least mid-November NOAA predicts the Midwest and Northeast to end the 2019/2020 winter season slightly warmer & wetter than normal The 2019 natural gas storage injection season showed many weeks of above average injections Current natural gas storage levels has risen to match the past 5 year average Natural gas NYMEX went up from $2.25/MMBTU October 23rd to $2.639/MMBTU in three days. Trading at $2.71/MMBTU at
October 2019 Energy Update Key Drivers Natural gas Storage: EIA predicts end of seasons levels slightly higher than 5 year average Natural gas storage: weekly injections coming in at record levels and natural gas demand drops Normal cod winter predicted: no El Nino or La Nino currently in the Pacific ocean Speculative traders not going selling short NYMEX ahead of a predicted normal winter: lowers price drop potential Natural gas drilling rig count has dropped 24%
September 2019 Energy Update Key Drivers Natural gas storage levels are higher than 1 year ago at this time by 14.6% Natural gas storage injections are on pace to enter winter 3% below the past 5 year average Upcoming major drop in natural gas fired generation expected as we near the end of summer Strong U.S. natural gas production continues as expected New LNG liquefaction plants continue to ramp up increasing natural gas demand Commentary
August 2019 Energy Update Key Drivers Ever stronger natural gas production Flat natural gas demand Strong storage levels in the U.S. & Europe Commentary From May 2019 to the end of July 2019 natural gas prices have dropped nearly $.50/MMBTU. Even in July, when the heatwave broke records over much of the country and natural gas consumed in the creation of electric hit an all-time high, natural gas prices still didn’t rise much. As soon as
Key Drivers Moving from a very cool June to a much warmer July Weak June demand resulted in very strong June storage injections Warmer temperatures + increasing exports = much higher July natural gas demand How hot will the Midwest get this summer???? Commentary While June 2018 was very hot, June 2019 in the Midwest was the coolest and wettest in 10 years. As a result the NYMEX gas prices, and in direct correlation, electric
It is SHOCKING. The more I explored the PUCO Supplier Apples to Apples chart for electric and natural gas rate offers for residents, the more shocked I was. These offers are being aggressively solicited to homeowners via phone or door to door. Some suppliers show pricing on the Apples to Apples chart artificially low to start for 1-3 months. Once they have the customer snared, they start billing an excessively high fixed rate after the
Community leaders and many residents often assume Governmental Aggregation is a product being forced on them and taking away their freedom of choice. In truth, Aggregation is an opportunity for residents. We hear all the time how people hate the many natural gas and electric aggressive telemarketing calls. Who knows if the price offer is good? Is the supplier honest and certified? What about door to door sales people. Are they offering a fair price? Nope!
June 2019 Energy Update Key Drivers Milder March, April, May and early June temperatures versus last year 89 bcf/day of natural gas production versus 79 bcf/day in 2018 A weak El Nino will likely result in warmer than normal temperatures this summer Nuclear generation in 2019 is trailing 2018 and more plants are to be retired this year Natural gas fired generation to make up most of the Nuclear generation gap LNG export capacity to double in
May 2019 Energy Update Key Drivers Continued growth in U.S. natural gas production Abnormally warm April 2019 in the Midwest Continued growth in natural gas fired electric generation Buyers of LNG force change in the pricing model Commentary April 2018 was much colder than normal, there was a robust economy, strong LNG exports, growing Mexico gas exports, growth in natural gas fired generation and a natural gas storage deficit in the U.S. All of
April 2019 Energy Update Key Drivers The United States natural gas storage deficit at the end winter 2019 Unlike 2018 will the natural gas storage deficit quickly disappear this spring? Spring’s natural gas production surplus over natural gas spring demand When will higher natural gas demand show up to lower the production surplus? Commentary At first glance the natural gas storage deficit as we end the 2018/2019 winter appears very bullish for natural gas and electric prices.
March 2019 Energy Update Key Drivers Record breaking U.S. natural gas production Record breaking U.S. natural gas demand Abnormally cold beginning to March End of the storage season deficit Commentary It’s entertaining to watch the wholesale energy traders shift their buy/sell positions every time the temperature forecasts change from one Friday to the following Monday. We’ve seen some major temperature shifts this winter over several weekends. NYMEX prices peaked in December and then they went
February 2019 Energy Update Key Data January 2019 NYMEX closed at $3.642/MMBT. February recently closed at $2.95/MMBTU March – October 2018 NYMEX averaged $2.845/MMBTU. March – October 2 019 is trading at an average of $2.893/MMBTU NYMEX calendar 2020 is trading at an average of $2.769/MMBTU. NYMEX calendar 2021 is trading at an average of $2.64/MMBTU Commentary It’s important to understand why the U.S. recently experienced a “polar vortex” event. It is rare for the
January 2019 Energy Update Key Drivers November – colder than normal temperatures December- warmer than normal temperatures January- updated forecasts to warmer than normal Storage deficit- 19% lower than year ago and 5 year average levels Commentary In mid-December both American and European weather models were confident that the colder than normal November was going to be followed by a colder than normal January. Two weeks later both forecast models declared their expectations of the reforming