Volume 13, Issue 6 | February 6, 2015

Editor's Note

Supply versus Demand

Two Week Review for January 23, '15 - February 5, '15

For this two week report period, the average 12-month price for natural gas on NYMEX fell 4.8% per therm while the12-month average price for peak power on the PJM  stayed steady closing up less than 1/2 of percent.

Over the last two weeks, the analysts have focused their attention on the natural gas storage levels and the natural gas production levels.  On the storage side, we have seen two surprisingly low withdrawals in a row. This week's withdrawal was 30% lower than the five year average of 165 Bcf.   Thanks to these small withdrawals, the storage deficit is disappearing.  Storage levels are now only 1.2% below the five year average. Some analysts predict the storage deficit will be non-existent at the end of winter.

On the production side, we are enjoying record gas output from the natural gas wells with most of the growth  coming from the shale formations.  The market has plenty of supply.  According to Aaron Calder, a senior Analyst at Gelber & Associates, who was quoted in "Gas Daily,"  new production is simply outstripping demand. 

For now, supply is greater than demand and energy prices look attractive. Stay tuned. NOAA is forecasting colder than normal temperatures for the period of Feb.12-20,2015. 


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Natural Gas Fundamentals

Natural Gas Storage Update: The Big Reverse

 

 

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 

2,428

2,543

-115

1,960

2,457

During the first two weeks of January 2015,  we  got  off  to a colder than normal start. The  storage withdrawals validated this fact as we saw withdrawals that were  22% larger than the five year average.

However, over the last two weeks,  the natural gas withdrawals have been surprisingly low.  For the second week in a row, we saw a withdrawal  that was less than the five year average .  According to EIA, this week's withdrawal was only 115 Bcf which was 30% lower than the five year average of 165 Bcf.  Last year at this time, we saw a withdrawal of 259 Bcf.

As a result  of these smaller than normal withdrawals, the storage deficit  is disappearing  Two  weeks ago, the storage levels were  5.5% below the five year average.  According to this week's  EIA report, the storage levels were  only 1.2%  below the five-year average. 


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 30, 2015 was 319 rigs. There was an increase of 3 rigs from the previous week. The count is 39 rigs lower than the count reported this same week last year. We are 54% below the five-year average gas rig count of 698.


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--14

$0.4855

July-14

$0.4400

Nov-14

$0.3728

Apr-14

$0.4584

Aug-14

$0.3808

Dec-14

$0.4282

May-14

$0.4795

Sept-14

$0.3957

Jan-15

$0.3189

June-14

$0.4619

Oct-14

$0.3984

Feb-15

$0.2866


NYMEX Values per Month for the Forward 12 Months

Thursday, February 5, 2015

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

Mar-15

$0.2600

Aug-15

$0.2766

Jan-16

$0.3226

Apr-15

$0.2614

Sept-15

$0.2759

Feb-16

$0.3221

May-15

$0.2645

Oct-15

$0.2793

12-month avg.

$0.2839

June-15

$0.2694

Nov-15

$0.2901

11/2014-3/2015

$0.2600

July-15

$0.2752

Dec-15

$0.3091

Crude Oil

$50/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 - 14

Dec - 14

Jan - 15

Feb - 15

Mar - 15

April - 15

 Actual

  505

649 

904 

 

 

 

 Normal

 466

786 

899 

 

 

 

 Departure from Normal

8%

  17%

          1%

 

 

 

 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.