Volume 10, Issue 38 | September 21, 2012

Editor's Note

Fall Arrives Saturday

Week in Review for September 14-20, 2012

Here we go again. Energy prices are range bound. They bump up one week and are down the next. Last week, we saw an unexpected jump as natural gas prices rose 6.7%, and the 12-month average price for peak power on the PJM rose 3%. However, for this seven-day report period, the average 12-month price for natural gas on the NYMEX fell 3.4%, and the 12-month average price for peak power on the PJM fell 1.7%.

We can explain most of this week's price drop by looking at the weather. The brutally hot days of summer are behind us. The arrival of cooler temperatures has reduced the demand for natural gas and thus placed some downward pressure on prices. In fact, according to data from Bentek Energy, "consumption for natural gas for power generation declined 13.1 percent, reflecting reduced air-conditioning demand as summer temperatures continued to subside."

Fall officially arrives on Saturday, September 22, which normally means lower demand for heating and cooling. Even with the arrival of autumn do not expect prices to fall. Many analysts expect energy prices to remain range bound until we see how winter demand materializes. The official start of winter is December 21.

For now we are enjoying cool weather and energy prices that are trading near a nine-year low. But stay tuned, mother nature is unpredictable and can have a huge impact on the direction of energy prices.


Focus on Green Power

Final Reminder: RSVP for WGES-sponsored Lunch and Learn Program in Washington, D.C.

Print buyers, designers, printers, and paper companies continue to integrate sustainable practices into their operations despite inherent challenges. Join Washington Gas Energy Services, Green Mountain Coffee Roasters, and the Center for Resource Solutions (CRS) to discuss one of the newest tools to help your business attract new customers and lower your paper and printing footprint. The CRS re:print certification program showcases businesses that choose to buy printed materials made with 100% green power. It also showcases printers and paper manufacturers that use 100% green power in their operations.

Printers, designers, other companies who become re:print certified reduce their carbon footprint and better position themselves to compete in the green marketplace. WGES customers can receive a 10% reduction on certification costs.

Come learn more about this dynamic program and how it can help your business grow on Tuesday, September 25 from noon to 1:30 p.m. at the Capital Hilton in Washington, D.C. All Energy Update readers can attend this event free of charge simply by sending an R.S.V.P to WGES Green Products Specialist Laura Pagliarulo at laura.pagliarulo@wges.com.

 


Natural Gas Fundamentals

Natural Gas Storage: Respectable Injection But Bubble Shrinks Again. Data Released September 20, 2012


 

 Current Week

Last Week 

Net Change

 This Week Last Year 

 Prior 5 Year Average

 

 Stocks (Bcf)

Stocks (Bcf)

(Bcf)

Stocks (Bcf)

 Average (Bcf)

 Total Lower 48

3,496

3,429

 67

3,176

3,218

Storage Update: Once again, this week's gas injection was smaller than normal. The gas bubble has now shrunk 20 out of the last 21 weeks. For this report week, the injection was finally a respectable 67 Bcf. However, last year at this time we saw an injection of 89 Bcf. The five-year average injection for this week was 73 Bcf. Thus, the natural gas storage surplus, on a year-to-year basis, shrank from 11% above last year's levels to 10%. The natural gas storage surplus over the five-year average shrank from 9% to 8.6%. The good news is that the natural gas storage fields are still above the five-year average. The storage fields are now 82% full. The traditional injection season ends Oct. 31.


Baker Hughes Rotary Rig Count For Natural Gas

Weekly Drilling Rig Update: The active U.S. gas rotary rig count released by Baker and Hughes for the week ending September 14, 2012 was 448 rigs. This was a decrease of 4 rigs from the previous week. The count is 464 rigs lower than the count reported this same week last year. We are 57% below the five-year average gas rig count of 1,044.


NYMEX Natural Gas Monthly Settlements For the Past 12 Months

(Price per therm at the well-head)

This was the closing price of gas at the well head for each of the past 12 months. The closing price for a month occurs on the 3rd business day prior to the start of the month. 

Oct-11

$0.3759

Feb-12

$0.2678

June-12

$0.2429

Nov-11

$0.3524

Mar-12

$0.2446

July-12 

$0.2774

Dec-11

$0.3364

April-12

$0.2191

Aug-12 

$0.3010

Jan-12

$0.3084

May-12

$0.2036

Sept-12

$0.2634


NYMEX Values Per Month For the Forward 12 Months

Thursday, September 20, 2012

(NYMEX - Price per therm at the Henry Hub well-head)

Oct-12

$0.2797

Mar-13

$0.3424

Aug-13

$0.3576

Nov-12

$0.2962

April-13

$0.3421

Sep-13

$0.3578

Dec-12

$0.3250

May-13

$0.3464

12-month avg.

$0.3364

Jan-13

$0.3402

June-13

$0.3509

11/12-3/13

$0.32944

Feb-13

$0.3434

July-13

$0.3554

Crude Oil

$92/barrel 


NYMEX Graph For Natural Gas - 12 Month Average Price Per Therm at Louisiana Well-Head

(Excludes Interstate Transportation)

 


PJM Electricity

Graph - PJM 12-Month Average Peak Power Price

On-Peak 1 Year Forward Price


Weather

Local Cooling Degree Days*

 

Cooling Degree Days** 

 

May - 12

June - 12

July - 12

Aug - 12

Sept - 12

Oct- 12 

 Actual

209

346

595

501

 

 Normal

108

314

457

406

 

 Departure from Normal

93.5%

10% 

30%

23%

 

Warmer

Warmer

Warmer

Warmer

 

**Cooling degree days are calculated by comparing the day’s average temperature to a 65 degree baseline.  If the day’s average temperature is below 65, there are no cooling degree days that day.  If the average temperature is greater than 65 degrees, then subtract 65 from the average temperature to find the number of cooling degree days.