Volume 11, Issue 46 | November 22, 2013

Editor's Note

Prices Rise for Second Week in a Row

Week in Review for November 15-21, 2013

Although the official start of winter is not until December 21, the unofficial start is the date when we record our first natural gas withdrawal from storage. So, the unofficial start of the heating season arrived this week when the U.S. Energy Information Administration reported the first withdrawal of the season. This week's withdrawal of 45 Bcf was larger than expected. The five-year average withdrawal for this time of year is only 2 Bcf.

Thanks to the onset of cold temperatures and the first storage withdrawal of the season, energy prices rose for the second week in a row. For this seven-day report period, the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) rose 2.2%, and the 12-month average price for peak power on the PJM rose 1.3%.

Analysts blame the recent price rally on the weather. The National Oceanic and Atmospheric Administration (NOAA) is predicting colder than normal temperatures east of the Mississippi for the next two weeks. This forecast is placing upward pressure on prices. However, it is too early to panic. Natural gas production is operating near all-time highs and the natural gas storage fields are 0.4 % above the five-year average.

Stay tuned. If you can predict the severity of the upcoming winter weather you may able to predict the short-term direction of both natural gas and electricity prices. However, keep in mind that even the forecasters have a hard time predicting our volatile weather.


Natural Gas Fundamentals

Natural Gas Storage Update: First Withdrawal of the Season. Data Released Nov. 21, 2013

 

 

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 

3,789

3,834

-45

3,878

3,774

Although the withdrawal season started 21 days ago (on November 1), we just recorded our first withdrawal of the season in this reporting period.

This week's withdrawal of 45 Bcf was larger than expected. Last year at this time, we recorded a withdrawal of 36 Bcf, whereas the five-year average withdrawal is only 2 Bcf.

Thanks to the robust injections that occurred over the summer, inventories are still above the five-year average. Natural gas inventories ended the week 0.4% above the five-year average. We are ready for winter.


Rig Count for Natural Gas

Weekly Drilling Rig Update: The active U.S. gas rotary rig count for natural gas released by Baker and Hughes for the week ending November 15, 2013 was 370 rigs. This was an increase of five rigs from the previous week. The count is 47 rigs lower than the count reported this same week last year. We are 55% below the five-year average gas rig count of 819.


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. 

Dec-12

$0.3696

April-13

$0.3976

Aug-13

$0.3459

Jan-13

$0.3354

May-13

$0.4152

Sept-13

$0.3567

Feb-13

$0.3226

June-13

$0.4148

Oct-13

$0.3498

Mar-13

$0.3427

July-13

$0.3707

Nov-13

$0.3496


NYMEX Values per Month for the Forward 12 Months

Thursday, November 21, 2013

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

Dec-13

$0.3702

May-14

$0.3744

Oct-14

$0.3830

Jan-14

$0.3740

June-14

$0.3776

Nov-14

$0.3891

Feb-14

$0.3742

July-14

$0.3812

12-month avg.

$0.3778

Mar-14

$0.3735

Aug-14

$0.3826

11/2013-3/2014

$0.37298

April-14

$0.3722

Sept-14

$0.3817

Crude Oil

$95/barrel 


NYMEX Graph for Natural Gas - 12 Month Average Price per Therm at the Louisiana Well-Head

(Excludes Interstate Transportation)



PJM Electricity

PJM Graph for Electricity - 12 Month Average Peak Power Price

On-Peak 1 Year Forward Price



Weather

Local Cooling Degree Days*


 

Cooling Degrees Day** 

 

May - 13

June 13

July - 13

Aug - 13

Sept - 13

Oct - 2013

 Actual

 144

351

511

383

 204

83

 Normal

108

314

457

406

202 

34

 Departure from Normal

33%

12%

          12%

        6%

1% 

144% 

Warmer

Warmer 

Warmer

Cooler

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.