Volume 18, Issue 10 | May 3, 2021

Editor's Note

Near Term Increases due to Production and LNG

Week in review for April 25 May 1, 2021

On Thursday, the U.S. Energy Information Administration (EIA) reported that working gas in storage as of Friday April 23, 2021 was 1,898 BCF.  This was an increase of 15 BCF from the previous week, higher than market expectations. Inventories are now 302 BCF lower than last year at this time, and 40 BCF below the 5-year average.

Forward energy markets were up this week. The NYMEX natural gas 12-month strip (Jun21-May22) ended up 1.3% and the PJM Western Hub ATC (7X24) 12-month strip was up 0.4%.

Over the last month natural gas near-term (Jun21-May22) prices have risen 6% with power following, though to a lesser extent, up 3%.   The increases are due in large part a tightening supply demand balance caused by relatively flat production (supply) and increased LNG exports (demand).   With production expected to eventually pick back up, natural gas prices for Cal 2023 & 2024 and beyond have risen much less than the prompt 12-months, up between 1-2%, increasing the “discount” of Cal 2023 & 2024 which now trade $0.38/MMBtu lower than Jun21-May22.

Henry Hub Natural Gas Forward Prices ($/MMBtu)

Term

Jun21-May22

2022

2023

2024

2025

Current Value

2.96

2.74

2.58

2.58

2.63

 


Weather

Washington, D.C. Area Cooling/Heating Degree Days

  

 

*Nov-20

*Dec-20 

*Jan-20 

*Feb-20 

*Mar-21 

*Apr-21 

Normal 

467

669

848

 677

546

236

 Actual

 321

731

819

763

435

238

Departure from Normal 

31%,
Warmer 

9%,
Colder

3%,
Warmer

13%,
Colder

20%,
Warmer

1%,
Colder

Cooling degree day (CDD) data is for the Washington, D.C. area and is 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 day’s average temperature is greater than 65 degrees, then subtract 65 from the average temperature to find the number of cooling degree days.

*Heating degree day (HDD) data is for the Washington, D.C. area and is 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, then subtract that average temperature from 65 to find the number of heating degree days.