Executive Market Summary

June 24th, 2016

Executive Market Summary

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“The Scoop”

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June 20th, 2016

“Executive Market Summary”

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June 10th, 2016

“Executive Market Summary”

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“The Scoop” – Market prices jumped up this week with a weak natural gas injection into storage of 65 Bcf. The price on the July contract has gone up 7% since first trading day of May 27th. Here are the main drivers as they are all bullish: temperatures across the US are above normal, natural gas rig count is at historical low and we are experiencing record natural gas generation burn.

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June 5th, 2016

“Executive Market Summary”

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“The Scoop”

Storage injection was 82 Bcf. This was a neutral driver as the number was aligned with analyst predictions. Expect prices to continue their slow climb due mostly from above average prices.

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May 27th, 2016

“Executive Market Summary”

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“The Scoop”

Energy Prices were up slightly but remain historically low. The next couple of weeks should see a slight climb in pricing as the Northeast experiences a heat wave and drilling activity is at record lows.

Northeast Power Demand Up Due To Above Average Temps

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May 20th, 2016

“Executive Market Summary”

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“The Scoop” – Market continues to provide great buying opportunities but mounting pressure is slowly pushing the pricing higher. The main drivers pushing prices higher: are the pull back in drilling production, lower than expected storage injections and above average summer weather forecast.

One Year Strip

 

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May 13th, 2016

Executive Market Summary

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While the warmest winter on record combined with record storage inventories and production levels kept prices low this winter; the EIA Short-Term Energy Outlook projects a “gradual rise through the summer, as demand from the electric power sector increases.” It appears that this rise in prices is already in effect with demand increasing and production dropping to a YTD low last week. Overall prices this summer are expected to be lower than last year’s, but higher still than the 17-year lows hit during/after the winter.

Looking long-term, the IRS issued new production tax credit (PTC) guidelines that are expected to accelerate the trend toward increased installation of wind power generation. The new guidelines have been revised to state developers of wind generation have four years to complete a new project and qualify for the PTC. Early estimates expect wind generation capacity to increase over 20% and reach 100 GW by 2019.

 

Long Term

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May 6th, 2016

Executive Market Summary

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Production numbers continue to steadily decline as drilling activity is starting to affect daily production levels. Production is averaging 1.8 Bcf/d less than the record levels set in February. Since the production record was set, totals have fallen from 73.2 Bcf/d in February, to 72.2 Bcf/d in March, and then 71.4 Bcf/d in April. In 2016, year-to-date production has averaged 72.2 bcf/d and demand has grown to average 81.6 Bcf/d. This decline in drilling activity and production, coupled with growing demand has seen prices jump over 10% since lows set in February and early march. The natural gas futures settle at $2.08 last Thursday and analysts believe that prices will hover around the $2.00 range during the remaining shoulder months, or at least until increase summer demand appears and production declines accelerate.

Keeping prices low are the lingering weather effects from El Nino, as well as, total storage inventories. The 68 Bcf injection this week was yet again above consensus expectations of 64 Bcf. Total inventories now sit 48.8% above last year’s levels, and 46.7% above the five-year average. Above normal temperatures are likely in May across most of the contiguous US.

 

Strip Chart

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April 29th, 2016

Executive Market Summary

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The past few weeks we have seen an uptick in natural gas prices in response to rising demand and production slowdowns. Prices rose for 7 consecutive days until this week’s storage report was announced. The largest injection of the year, and since October 10, came in at 73 Bcf which was above consensus expectations of 70 Bcf. Total inventories are 51.6% above last year’s levels and 48.2% above the 5-year average. In regards to storage, the net injection for April gave prices some support as it is projected to be 59.4% lower than last year’s numbers. Storage rose a total of 325 Bcf last year compared to an estimated 132 Bcf in April 2016.

Weather continues to remain an extremely bearish driver with last week’s temperatures 38% and 47% warmer than the comparable week last year and the five-year average, respectively. Total demand across the US was cut by 70 Bcf last week in response to the warm weather. Looking back to last September, it has been 18% and 16% warmer than last year and the five-year average, respectively.

 

Strip Chart

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April 22nd, 2016

Executive Market Summary

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Big news this week came from Kinder Morgan’s decision to suspend the Northeast Energy Direct project (Tennessee Gas Pipeline). Kinder Morgan announced Wednesday that the reason for cancelling the projected was because it was unable to fully contract the necessary capacity. They also cited that the low gas price environment stemming from production innovations made it hard for producers to make new long-term commitments. This decision, as well as, the lack of regulatory procedures to facilitate binding commitments from electric distribution companies (EDCs), may open the doors for more project cancellations.

In other news, the EIA reported a 7 Bcf injection this week, which was slightly larger than consensus expectations of just a 2 Bcf injection. This low volume injection is bullish for this time of year coming in 75 Bcf under last year’s injection and 38 Bcf under the 5-year average. Total inventories still remain a bearish driver overall with current storage levels 55% above last year’s levels and 48.5% above the 5-year average. Weather is also expected to remain a bearish driver this week as the latest 8-14-day forecast shows higher likelihood of above normal temperatures for the eastern third of the United States.

Weather

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