This report week’s 90 Bcf injection was larger than last year’s 43 Bcf injection and the five year injection average for the same week of 47 Bcf but it still did not meet expectations. Forecasts anticipated a 95-96 Bcf build and upon release of the report, the August natural gas futures contract increased 4 cents.
Net storage injections have totaled 1,397 since April 4 versus 1,080 Bcf for the same 16 weeks in 2013. These above average injections are a great help in making up for the deficit we created this winter.
Natural gas consumption decreased for the week mainly due to weather. Temperatures fell below normal for much of the eastern half of the United States. Mild temperatures are expected to continue for the next two weeks according to several sources, including John Kilduff, a partner at Again Capital LLC, a NY based hedge fund focusing on energy.
Production continues increasing overall – dry production hit a record high on Monday at 69.1 Bcf, according to the EIA. Genscape, a provider of real-time data and intelligence for commodity and energy markets, reports that dry production reached 70 Bcf for the first time Monday.Read More
Natural gas storage injections continue increasing at a record pace. This week’s injection was 107 Bcf, exceeding expectations of 100 Bcf. This is the eighth out of nine consecutive weeks storage has come in at or above 100 Bcf. From the week ending on April 4 through the week ending on July 11, net storage injections have totaled 1,307 Bcf, versus 1,037 Bcf for the same 15 weeks in 2013 (EIA).
Cooler temperatures this week have also had a bearish effect on the market. A cold air mass came down from the arctic and dropped temperatures across the nation – mainly in the Midwest. Patrick Badgley, Platts’ North American natural gas editor, points out that because most of the country has experienced a mild summer – gas prices are taking a hit.
Storage remains 608 Bcf below last year’s levels and overall consumption rose this week by 1.9%. The cooler weather caused residential and commercial demand to increase slightly. Power burn also increased by 3.7% compared to last week.Read More
Natural gas futures hit a six-month low yesterday. According to Tim Alford with Armored Wolf, price spikes are not expected to be as large or sustained as long because of the increase in production. Record production continues to offset the natural gas storage deficit but even with the record injections, storage remains more than 20% less than last year’s levels.
For the first time in 8 straight weeks, the natural gas injection came in below 100 Bcf at 93 Bcf. Forecasts were calling for a 87 Bcf build which is more than last year’s 81 Bcf build and larger again than the five year injection average of 72 Bcf.
Total natural gas consumption fell this week by 1.5 Bcf/day thanks to a 1.6 Bcf/day decrease in power burn. Temperatures in the Northeast, Midwest and Southwest registered cooler temperatures which helped account for the decline.
There are 17 more weeks in the injection season which ends October 31. The EIA increased their forecast for end of October levels from 3,424 Bcf to 3,431 Bcf.Read More
- Natural gas futures hit a six-month low on Thursday, July 10, settling at $4.12/MMBtu – a 14% drop since June 12 (WSJ)
- Extreme winter weather in January resulted in seven out of the 10 biggest demand days on record for the U.S. (Bentek)
- The week ending January 10 posted a record-high withdrawal of 287 Bcf – the largest for the 20 years which data exists (EIA)
- Natural Gas production hit a record 72 Bcf/day the in the first three months of 2014 (WSJ)
- Since mid-May, gas inventories have risen 28% faster than the five-year average – see chart below (WSJ)
Natural gas storage injections continue for the eighth week at or above 100 Bcf. This week’s 100 Bcf injection was above last year’s 75 Bcf injection and the five year injection average of 68 Bcf but failed to meet the forecasted predictions of 102 Bcf.
The demand for natural gas is in July expected to be lower than normal due to cooler temperatures. For more information on the weather, please see below.
Natural gas supply and production both increased overall. Supply increased at 0.1 Bcf/day for the third week in a row, landing at 73.4 Bcf/day. Total dry production also increased for the third week in a row by 0.1 Bcf/day.
Weather is a neutral market driver mainly because of the start of summer weather and uncertainty around the El Nino event. An El Nino event is correlated with cooler than normal temperatures and a suppressed hurricane season. WSI predicts below normal temperatures July through September for the north-central and northeastern United States. Warmer than normal temperatures are expected in the southeast, but if the El Nino occurs it has the potential to cool down that region of the US.
Please note the natural gas market closed at noon today in anticipation for the Independence Day holiday. Have a great weekend!Read More
The newly overturned EPA standards seek to cut carbon pollution created by power plants by an average of 30% by 2030. The new emission standards will accelerate the United State’s transition to using alternative sources of energy for electricity generation. Coal is considered the dirtiest fossil fuel and since 202, 297 coal-fired units at power plants have already retired or are scheduled for retirement.
Wyoming produces approximately 40% of the coal for our nation and, similarly, accounts for the most carbon per capita in the US. While the United States still relies on coal for nearly 40% of it’s electricity needs, Wyoming governor, Matt Mead, believes the emissions standards will hurt not only his state but also the rest of the nation. Because coal is so prevalent in Wyoming, it obviously provides quite a number of jobs to its citizens. They have vowed to keep coal as an ‘economic bedrock’ even if it means shipping overseas.
For more information please click here.Read More
North Dakota, where you can find the oil and natural gas-rich Bakken Shale, lacks adequate infrastructure. This means any natural gas that isn’t captured is flared off and in April alone, these wells burned off 10.3 Bcf of natural gas - equating to nearly $50 million dollars. Flaring off natural gas degrades air quality and energy companies lose out on revenue though many companies make the money back in the amount of crude oil they generate.
On Tuesday, a new set of restrictions were introduced. The North Dakota Industrial Commission, which regulates and promotes the state’s oil industry, is now requiring oil producers to abide by production allowances that limit flaring at new and existing wells. The guidelines go into effect on September 30 and set targets for flaring at 23% of all gas produced by January 2015. After, the target is reduced to flaring only 20% of natural gas produced by 2020.Read More
Weather Services International (WSI) expects no change to the quiet tropical season. This year may likely be the first since 2009 we go into July without one named storm. Regarding temperatures, WSI still expects below normal temperatures across the north-central and northeastern states. Above normal temperatures are expected in the Southeast US and western states. Click image below for the most recent forecast for July – September.
Natural gas storage increased by triple digits for the seventh consecutive week. The injection was 110 Bcf, above the expectations of approximately 104 Bcf. This injection was larger than the 81 Bcf 5-year injection average and larger than last year’s injection of 94 Bcf.
Chris Kostas, with Energy Security Analysis, Inc. (ESAI), predicts natural gas demand in July will be below average due to the cooler-than-normal temperatures expected over most of the country. This should result in relatively soft energy prices – particularly for the Northeast and Midwest markets.
Natural gas production is increasing in the three major tight oil production areas. The Eagle Ford, Permian Basin and Bakken Shale are partially responsible for natural gas production increasing by 5% overall so far in 2014. Since 2011, gas production in these three regions increased by 88%. Natural gas production hit a record high of 68.5 Bcf on Saturday.
Natural gas storage remains low compared to the one and five year averages but the 100+ Bcf builds are helping decrease the deficit. Overall natural gas demand surpassed production. Consumption rose 1.8%- driven by increases in the industrial and power burn sectors.Read More
The Federal Energy Regulatory Commission (FERC) approved the second natural gas export terminal in Louisiana.
Cameron LNG, LLC, owned by Sempra Energy, will build a liquefied natural gas (LNG) export facility in Hackberry, La. The project will cost nearly $10 billion and construction begins later this year. It is expected to export up to 1.7 billion cubic feet of natural gas per day by 2019.
About 24 projects still wait review from the Energy Department or FERC.
For more information on the matter, please visit the Bloomberg article here.Read More
The natural gas injection for this week came in at 113 Bcf, higher than the 110 that was expected. This is the sixth consecutive injection above 100 Bcf. As you saw from last week, injections have increased at a record pace and this week was no different. From the week ending on April 4 to the week ending on June 13, net storage injections have totaled 897 Bcf, versus 725 Bcf for the same 11 weeks in 2013, and 756 Bcf for these weeks between 2009 and 2013, on average (EIA).
With 20 more weeks in the injection season, there is still a lot of pressure to make up for the depletion we saw in natural gas storage this winter.
Weather is getting warmer which increases the demand for natural gas consumed for electric generation or power burn. Though power burn increased, the overall natural gas consumption has decreased for the seventh week in a row.
In the long term:
According to the June ITR report, there will be a slowing in the US economy late 2014 and early 2015. This is due mainly to slowing residential construction, decelerating retail sales and moderating growth in business to business activity.Read More