Executive Market Summary

September 19th, 2014

Executive Market Summary

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For this report week, temperatures (in the lower 48 states) averaged 71.7 degrees (EIA). The mild weather persists which is good for production numbers, storage injections and demand but there is a possibility it may not last much longer. Preliminary reports for a winter forecast have come out and many like Commodity Weather Group and WeatherBELL Analytics are preparing for the possibility of severe winter weather again this year. The polar vortex in 2013 resulted in the coldest January through April for the Eastern US since 1993 (National Climatic Data Center).

Our storage injections remain strong. The 90 Bcf injection this week was in line with market expectations. Injections continue to surpass both the one and five year averages. Only seven weeks remain in the injection season but if the weather remains mild, we could see injections through at least the first few weeks into November. As state above, that is still up in the air until an official winter forecast comes out.

The EIA predicts storage levels to be at 3,477 Bcf by the end of October, which will require an average injection of 84 Bcf each week. The deficit continues to decrease from last year’s brutal winter but storage still remains 14% below last year.

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September 11th, 2014

Executive Market Summary

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There hasn’t been much of a change in factors affecting the market since last week. Weather remains relatively mild. Most of the northeast is experiencing fall-like weather where cooler temperatures came a little earlier than usual. Production remains high – helping us fill the deficit from this winter. The storage is now more than 50% fuller from when the injection season began in April. From the week ending September 5, injections have totaled 1,979 Bcf versus 1,554 Bcf for the same 23 weeks in 2013 (EIA). This report week’s injection surpassed the market expectations and both the one and five year averages. We are left with 8 weeks in the injection season to continue filling the gap from last year’s harsh winter.

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September 5th, 2014

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The overall mild summer remains a large driver on gas costs, especially as record production overwhelms demand. According to a Wall Street Journal article, WSI is predicting two cool weather patterns to hit the country in the next two weeks and the central US is expected to experience fall-like weather. WSI’s forecast for September indicates moderate temperatures for most regions.

The natural gas storage injection of 79 Bcf was above expectations of 74 Bcf which helped gas prices fall following the release of the report. This week’s injection also continued the trend of being larger than both the one and five year average injections. Nine weeks remain in the injection season.

 

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August 28th, 2014

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August has been a relatively mild month across most of the central and eastern US. We are quickly approaching September and forecasts indicate cooler-than-normal temperatures for most of the north-central US. WSI predicts this same pattern for a majority of the fall and indicates that the data needed to make a successful winter forecast is not yet available. The first official winter forecast will be available in September.

The natural gas injection was 75 Bcf, below expectations of 76 Bcf, causing prices to rise briefly immediately following the report. Some analysts predicted up to a 78 – 80 Bcf injection. 2014 has been the strongest injection season in the past six years but storage still remains 15.7% below the levels last year.

High production numbers have assisted in reducing the storage deficit due to extreme weather by more than 50% since the beginning of injection season. Forecasts indicate strong injection numbers will continue and the EIA predicts storage to sit at 3,460 Bcf by the end of injection season (October 31).

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August 22nd, 2014

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Overall mild weather this summer has helped US natural gas production achieve record levels, curtail natural gas demand in the power sector and support large, ongoing natural gas injections.

Gas production continues to break records. US dry natural gas production hit a high of 69.3 Bcf on July 30 and reached the same level again a few times this month.

NOAA is predicting that weather will remain mild in the Midwest and Northeast portions of the United States. The Southern part of the nation and California area can expect above normal temperatures through the end of the month.

Weather

This report week’s injection was 88 Bcf – surpassing the expectation of 82 Bcf as well as last year’s 58 Bcf build and the 5-year average build of 48 Bcf. This was the 18th straight injection beating the 5-year average injections. Again, the mild weather is helping support the large injections we continue seeing each week. Bentek Energy’s injection forecast for the next three weeks is 87, 82 and 76 Bcf.

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August 15th, 2014

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According to the National Oceanic and Atmospheric Administration, above normal temperatures are expected for the eastern half of the United States through next week. Temperatures in the Midwest are expected to remain normal to above normal in most areas. CenterPoint Energy also noted that forecasts are predicting the last half of August to be warmer than what was anticipated originally.

Due to the lack of cooling demand overall consumption decreased by 0.2%. The largest decline in power burn was in the Midwest, at 27.6%. Supply continues increasing due to record production numbers. The EIA released an updated Short Term Energy Outlook and expects production in 2014 to grow by 5.3% compared to last year. Above weekly storage injections have raised the projected end of injection season inventory to 3,460 Bcf.

Storage still stands 17.7% less than it did last year despite the record injections we continue seeing each week. Though the projected end of injection season inventory was raised, it still stands below the five-year average peak storage value of 3,851 Bcf. In order to reach the five-year peak weekly injections would need to average 114 Bcf/week. So, until the storage gap is filled it remains a bullish factor.

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August 8th, 2014

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For the most part, weather continues to be moderately cooler than average. As stated last week, forecasts predict August 2014 to be about 1.3% cooler than August 2013. Overall temperatures are expected to be relatively normal this coming week but a cold front is estimated to hit the Eastern United States later in the week.

The reduced weather-related demand will allow inventories to continue refilling at a rapid pace and keep natural gas usage at power plants low. Natural gas consumption for power generation fell 3% and total consumption fell by 2.6% this week.

This report week’s injection was about 2 Bcf lower than what forecasters expected. The 82 Bcf injection was also the first time in 12 weeks there was a smaller weekly build than last year and the year-on-year defecit increased from 530 to 538 Bcf. Early forecasts for next week indicate an injection well above last year’s rate.

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August 1st, 2014

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This June was moderately warm across the US and July was significantly cooler overall – especially across the central regions of the country. Cooler temperatures are generally a result of emerging El Nino events and WSI’s chief meteorologist Todd Crawford believes that the progression toward El Nino conditions is continuing. Below-normal temperatures will be prevalent from the northern/central Rockies eastward with above normal temperatures expected in the Pacific Northwest and Southeast for the remainder of summer.

Mild temperatures August and September will decrease weather-related demand and should allow natural gas inventories to continue refilling rapidly – decreasing the deficit to last year’s level.  Chris Kostas, a Senior Power and Gas Analyst at ESAI, expects energy demand to soften considerably in October due to the seasonal temperature change. A soft demand is expected to help the natural-gas injection season finish very strong.

This report week’s storage injection fell short of expectations and caused about an eight cent bump in the market. The 88 Bcf injection was still well above last year’s injection of 57 Bcf. Fourteen weeks remain in the injection season and the EIA expects inventory levels to reach 3,431 by October 31.

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July 25th, 2014

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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.

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July 18th, 2014

Executive Market Summary

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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.

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