Volume 10, Issue 41 | October 12, 2012

Prices Continue to Rise

Week in Review for October 5-11, 2012

Week in Review for October 5-11, 2012

Energy prices rose again this week. For this seven-day report period the average 12-month price for natural gas on the NYMEX rose 4.7% and the 12-month average price for peak power on the PJM rose 2.1%. From September 7 to October 11, 2012 natural gas prices have risen 17.4% and electricity prices have risen 8.1%.

Weather is the fundamental variable that appears to get credit for this week's price spike. According to BENTEK Energy, natural gas consumption this week was 5.9% higher than the previous week. This increased demand was primarily attributed to the fact that people were turning on their space heaters this week. As energy demand rises, energy prices tend to follow.

Who uses natural gas for space heating? According to the U.S. Energy Information Administration, "natural gas is the most widely used source for household space heating, with 58.3 million homes relying on natural gas heating, while 43.8 million homes heat with electricity, 7.2 million heating with oil, 5.7 million with propane, and 2.5 million with wood. "

For now, the market is focused on the fact that winter demand is on the way. However, it will be interesting to see what happens next week as the six-to-10-day forecast calls for warmer-than-normal temperatures in the northeastern United States.

WGES' Harry Warren Discusses the Impact of Natural Gas on Renewables

During a recent interview, Harry Warren, president of Washington Gas Energy Services, explained why businesses continue to have incentives to invest in renewables, despite low natural gas prices and a growing gas market.

How are low natural gas prices affecting investments in renewable energy? During a recent edition of E&E TV's OnPoint program, Harry Warren, president of Washington Gas Energy Services, explained why businesses continue to have incentives to invest in renewables, despite low natural gas prices and a growing gas market. He also discussed recent shifts in the political rhetoric on energy policy.

 

View video or read the transcript.

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To find out how WGES' renewable products like WGES CleanSteps® WindPower can benefit your business, contact Laura Pagliarulo, Manager, Green Products, at 703.793.7348 or lpagliarulo@wges.com.

Natural Gas Storage: Gas Bubble Continues to Shrink. Data Released Oct. 11, 2012

Working gas in storage for the week ending October 5, 2012 was 3,725 Bcf.


 

 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

3,725

3,653

 72

3,489

3,456

Storage Update: We only have three weeks left in the traditional injection season and it does not appear that we will max out storage capacity. It looks like we will end the storage season with approximately 4,000 Bcf in storage.

Throughout the summer months, the injections were well below average. Even though the past four injections were much closer to normal, they were still below the five-year averages.

This week's injection of 72 Bcf was below expectations. Last year at this time we saw an injection of 108 Bcf. The five-year average injection for this week was 84 Bcf. Thus, the natural gas storage surplus, on a year-to-year basis, shrank from 8% above last year's levels to 6.8%. The natural gas storage surplus over the five-year average shrank from 8.3% to 7.8%.

Since May 3, 2012, the gas surplus has now shrunk from 55% above the five-year average to only 6.8% above the five-year average. However, the good news is that the natural gas storage fields are above the five-year average and will be close to full by November 1, which is the start of the traditional winter heating season.

Baker Hughes Rotary Rig Count For Natural Gas

Active U.S. gas rig count released by Baker Hughes for the week ending October 5, 2012 was 437 rigs.

Weekly Drilling Rig Update: The active U.S. gas rotary rig count released by Baker and Hughes for the week ending October 5, 2012 was 437 rigs. This was an increase of two rigs from the previous week. The count is 498 rigs lower than the count reported this same week last year. We are 58% below the five-year average gas rig count of 1,037.

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. 

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

Feb-12

$0.2678

June-12

$0.2429

Oct-12

$0.3023

NYMEX Values Per Month For the Forward 12 Months

Thursday, October 11, 2012
Price per therm at the Henry Hub well-head

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

Nov-12

$0.3604

April-13

$0.3940

Sep-13

$0.4051

Dec-12

$0.3900

May-13

$0.3959

Oct-13

$0.4086

Jan-13

$0.4030

June-13

$0.3993

12-month avg.

$0.3973

Feb-13

$0.4040

July-13

$0.4032

11/12-3/13

$0.39136

Mar-13

$0.3994

Aug-13

$0.4048

Crude Oil

$91/barrel 

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

(Excludes Interstate Transportation)

 

Graph - PJM 12-Month Average Peak Power Price

On-Peak 1 Year Forward Price

Local Cooling Degree Days*

 

Cooling Degree Days** 

 

May - 12

June - 12

July - 12

Aug - 12

Sept - 12

Oct- 12 

 Actual

209

346

595

501

229

 

 Normal

108

314

457

406

202

 

 Departure from Normal

93.5%

10% 

30%

23%

13.4%

 

Warmer

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.