Volume 12, Issue 9 | March 7, 2014

Editor's Note

A Year To Forget

Week in Review for Feb. 28 - March 6, 2014

Last week analysts were surprised to see natural gas prices fall 6% on the New York Mercantile Exchange (NYMEX) and 5% for peak power on the PJM. Unfortunately, yet as predicted, this price drop was short lived. For this week's seven-day report period, the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) rose 2.4% and the 12-month average price for peak power on the PJM rose 4%.

The Bears did not have a chance against the Bulls this week. The extremely cold temperatures and the  huge storage withdrawals kept upward pressure on both natural gas and electricity prices .

The Bears have not been able to place much downward pressure on energy prices this winter because heating demand has been too great. In fact, the month of January 2014 was brutal, coming in 12% colder than normal, and was marked by record energy demand across the country. In that same month the U.S. consumed more gas than any other month in history and power burn set an all-time record high. February 2014 followed this trend, coming in 5% colder than normal. Then, to add insult to injury ,on March 4, 2014, the temperatures at  Dulles International Airport dropped to a record breaking low of -1 degrees.  

These cold temperatures created an unusually large demand for natural gas heating this winter which depleted the natural gas storage fields and placed upward pressure on energy prices.  The natural gas storage fields are  now 38% below the five-year average and the storage deficit continues go grow. Last year at this time, natural gas inventories were 15% above the five-year average.

If the storage deficit continues to grow during the month of March, it will be a challenge for the utilities to replenish the caverns during the traditional refill season of April 1st to Oct 31st.  This additional demand component could place upward pressure on energy prices during the summer months.


Spotlight on Clean Currents Commercial Accounts

Clean Currents Customers can look to WGES for renewable energy products

This month 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 Deficit Now 43% Below 5 Year Average. Data Released March 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 

1,196

1,348

-152

2,104

1,954

The colder than normal temperatures this week worsened the storage deficit.  For this report period we saw a larger than expected withdrawal of 152 Bcf. This week's withdrawal was 2% larger than last year's withdrawal of 149 Bcf and 44% larger than the five-year average withdrawal of 105 Bcf. 

Due to the huge withdrawals we are experiencing  this winter,  the storage deficit continues go grow. The natural gas storage fields are now 43% below last year's levels and 38% below the five-year average. Last year at this time, natural gas inventories were 15% above the five-year average.

If the storage deficit continues to grow during the month of March, it will be a challenge for the utilities to replenish the caverns during the traditional refill season of April 1st to Oct 31st.  To offset this large than normal deficit the utilities will have to inject more gas than usual into the caverns during the re-fill season. This additional demand component could place upward pressure on energy prices during the summer months.


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 28, 2014 was 335 rigs. This was a decrease of 7 rigs from the previous week. The count is 85 rigs lower than the count reported this same week last year. We are 56% below the five-year average gas rig count of 766.


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. 

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

July-13

$0.3707

Nov-13

$0.3497

Mar-14

$0.4855


NYMEX Values per Month for the Forward 12 Months

Thursday, March 6, 2014

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

April-14

$0.4662

Sept-14

$0.4604

Feb-15

$0.4779

May-14

$0.4603

Oct-14

$0.4611

Mar-15

$0.4650

June-14

$0.4622

Nov-14

$0.4648

12-month avg.

$0.4672

July-14

$0.4653

Dec-14

$0.4752

11/2014-3/2015

$0.47324

Aug-14

$0.4641

Jan-15

$0.4833

Crude Oil

$103/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 

754

 

 

 Normal

 466

 786

899 

728 

 

 

 Departure from Normal

 17%

 11%

         12% 

 4%

 

 

 Colder

 Warmer

Colder 

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.