Volume 12, Issue 6 | February 14, 2014

Editor's Note

Upward Pressure on Energy Prices as the Market Looks for a Thaw

Week in Review for Feb. 7-13, 2014

Cold weather and high energy demand have once again placed upward pressure on energy prices this week. For this seven-day report period, the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) rose 1.8%, and the 12-month average price for peak power on the PJM rose 1%. Luckily, the moderating weather forecast kept prices from make any big gains.  

The month of January was marked by record energy demand across the country. According to Bentek, "the U.S. in January consumed 251 Bcf more gas than any other month of record." Additionally, according to Bentek, the "U.S. power burn in January averaged 21.4 Bcf/day, an all-time record high for January." 

The cold weather patterns and the record high energy demand over the last six weeks have kept upward pressure on energy prices. Since Jan. 1, 2014, the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) has risen 10% and the 12-month average price for peak power on the PJM has risen 17%.

Where do energy prices go from here? The concern is that the natural gas storage bubble has disappeared. Natural gas storage levels are now 34% below last year's levels and 27% below the five-year average. Last year at this time, natural gas inventories were 16% above the five-year average.  

If February and March are colder than normal, the industry will spend all Spring and Summer filling up the depleted storage fields, keeping upward pressure on both electricity and gas prices. We need a warming trend to help keep on a lid on energy prices. Luckily, NOAA's 6-10 day outlook is finally calling for above average temperatures east of the Mississippi.  


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: Levels At 10 Year Low. Data Released Feb. 13, 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 

1,686

1,923

-237

2,549

2,317

The sustained cold weather continues to create larger than normal withdrawals from the natural gas storage fields. For this report period, we saw another unusually large withdrawal of 237 Bcf. This week's withdrawal was 55% larger than last year's withdrawal of 152 Bcf and 46% larger than the five-year average withdrawal of 162 Bcf.

Because of these larger than normal withdrawals, the natural gas storage fields are operating at a seasonal 10 year low. Storages are now 34% below last year's levels and 27% below the five-year average. Last year at this time, natural gas inventories were 16% above the five-year average.

This growing deficit is keeping upward pressure on 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 February 7, 2014 was 351 rigs. This was a decrease of 7 rigs from the previous week. The count is 74 rigs lower than the count reported this same week last year. We are 55% below the five-year average gas rig count of 774.


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 13, 2014

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

Mar-14

$0.5223

Aug-14

$0.4636

Jan-15

$0.4863

April-14

$0.4632

Sept-14

$0.4608

Feb-15

$0.4804

May-14

$0.4591

Oct-14

$0.4620

12-month avg.

$0.4722

June-14

$0.4610

Nov-14

$0.4658

2/2014-3/2014

$0.49275

July-14

$0.4647

Dec-14

$0.4767

Crude Oil

$100/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.