Volume 12, Issue 5 | February 7, 2014

Editor's Note

January 2014 Sets Numerous Records.

Week in Review for Jan. 31, '14 to to Feb. 6, '14

The sustained cold weather of January '14 wreaked havoc on the energy markets. The record breaking month  upended energy budgets and forced two suppliers out of business.

We saw record demand days for natural gas in January 2014, and we saw the PJM power grid break their previous winter demand record on Jan. 7, 2014. The month of January ended 12% colder than normal. 

The record demand was bad enough, but to make matters worse, the unusually cold temperatures in January also caused unexpected outages of power plants on the PJM. This double threat of record high demand and power plant outages caused record high price spikes in the spot markets. Natural gas prices traded for more than $10/therm and daily electricity prices traded above $0.50/kwh in the daily spot markets. These record high spot prices put some suppliers out of business if they were not properly hedged and caused some budget overruns for the month of January if customers were on a variable rate plan.

To date, the price spikes in the futures markets have not been as drastic as the price spikes on the spot market.  Since Jan. 1, 2014, the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) has risen 8% and the 12-month average price for peak power on the PJM has risen 16%.

Where energy prices go from here depend on the February weather patterns. We are hopeful that the polar vortexes stay to the north. The concern is that these colder than normal temperatures have wreaked havoc on the natural gas storage fields. Last year at this time, natural gas inventories were 12% above the five-year average. However, storage levels at the end of this report period were 22% below the five-year average.

The record demand for both natural gas and electricity and the growing storage deficit are keeping upward pressure on energy prices. We need a warming trend to help keep on a lid on energy prices.


Spotlight on Clean Currents Commercial Accounts

FAQs for Clean Currents Commercial Accounts

Last week Clean Currents announced that it was unable to continue to provide electricity supply to its customers because it did not have the financial resources to handle the sharp spike in wholesale electricity prices caused by the extreme and prolonged cold weather in January.  Washington Gas Energy Services (WGES) is ready meet the renewable energy needs of former Clean Currents’ customers, without disruption in service.

WGES offers products with the same renewable content that was offered under Clean Currents’ contracts. For commercial customers, WGES offers wind power for any portion of a customer’s electricity supply or the option to supplement your existing electricity supply plan with our wind Renewable Energy Credits (RECs). Customers can choose either national or local wind farms as the source.

For more than 17 years, WGES has supplied retail energy to residential and commercial customers in the mid‐Atlantic region. More than 10 years ago, we began to offer sustainable energy options. Today, we are one of the largest suppliers of electricity and natural gas in the mid‐Atlantic region, and in our service area we are the most tenured and experienced supplier of sustainable energy options that include WGES CleanSteps® WindPower, WGES National WindPower WGES PA WindPower, WGES CleanSteps® Carbon Offsets and WGES PA Carbon Offsets.

Learn more about both wind power and carbon offsets at www.wges.com/commercialgreen or contact our Account Manager, Technical Sales, Richard Walsh, at richard.walsh@wges.com or by phone at 703-793-7533.

 

 

 


Natural Gas Fundamentals

Natural Gas Storage Update: Storage Levels at 10 Year Low. Data Released Feb. 6, 2014

 

 

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 

1,923

2,185

-262

2,701

2,479

The sustained cold weather has created record high withdrawals from the natural gas storage fields this winter. As a result, at the end of Jan. 31, 2014, the natural gas storage fields were operating below 2,000 Bcf  which was a new 10 year low for this time of year.

For this report period, we saw an unusually large withdrawal of 262 Bcf  which was the fifth largest withdrawal ever recorded by the EIA.  This week's withdrawal was twice the size of last year's withdrawal of 129 Bcf  and 73% greater than the five-year average withdrawal of 151 Bcf.

The deficit continues to grow. Last year at this time, natural gas inventories were 15% above the five-year average. At the end of this report period, storages were were 28% below last year's levels and  22.4% below the five-year average.

This growing deficit is keeping upward pressure both electricity and gas prices.


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 January 31, 2014 was 358 rigs. This was an increase of 2 rigs from the previous week. The count is 71 rigs lower than the count reported this same week last year. We are 54% below the five-year average gas rig count of 780.


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. 

Mar-13

$0.3427

July-13

$0.3707

Nov-13

$0.3497

April-13

$0.3976

Aug-13

$0.3459

Dec-13

$0.3818

May-13

$0.4152

Sept-13

$0.3567

Jan-14

$0.4407

June-13

$0.4148

Oct-13

$0.3498

Feb-14

$0.5557


NYMEX Values per Month for the Forward 12 Months

Thursday, February 6, 2014

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

Mar-14

$0.4931

Aug-14

$0.4555

Jan-15

$0.4807

April-14

$0.4562

Sept-14

$0.4533

Feb-15

$0.4750

May-14

$0.4516

Oct-14

$0.4545

12-month avg.

$0.4633

June-14

$0.4533

Nov-14

$0.4590

2/2014-3/2014

$0.4746

July-14

$0.4560

Dec-14

$0.4710

Crude Oil

$98.77/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 Heating Degree Days*

 
 
 

Heating Degrees Day** 

 

Nov - 13

Dec 13

Jan - 14

Feb- 14

Mar - 14

April - 14

 Actual

  543 

 696

1008 

 

 

 

 Normal

 466

 786

899 

 

 

 

 Departure from Normal

 17%

 11%

         12% 

    

 

 

 Colder

 Warmer

Colder 

 

 

 

**Heating degree days are calculated by comparing the day’s average temperature to a 65 degree baseline. If the day’s average temperature is above 65, there are no heating degree days that day. If the day's average temperature is less than 65 degrees, subtract the average temperature from 65 to find the number of heating degree days for that day.