Energy Market Info
Current NYMEX
Oil, gas, electricity markets:
Energy
Markets
Natural Gas Storage:
EIA
Weekly Report
Storage Scorecard: View The Storage Scorecard
Natural gas chart: October 2010 Graph
Natural gas futures: Current
NYMEX
During the spring, summer and fall (normally April through October), natural gas supply (domestic and imports combined) is greater than demand, so excess supply is injected into storage for the winter months. In winter, demand exceeds supply and withdrawals are made from storage to cover the shortfall between higher weather-related demand and gas availability. Understanding the direction of the natural gas market will help in understanding the direction of electricity markets, as a larger percentage of power is gas-fired generation.
Additionally, increased natural gas supply is coming from unconventional shale basins and horizontal drilling within our continent. As more supply becomes non-Gulf related, the potential for devastating damage to our overall total supply and infrastructure from Gulf-related hurricane activity becomes less and less.
In Our Opinion - August 13, 2010
Market Briefing: A Lot Depends Upon the Heat
The extreme hot weather that the country has been experiencing over the past month has been the major source of A/C demand, just like it is every year. But it has been seemingly hotter this summer than previous summers, and we’ve still got a ways to go. This is why last week’s EIA storage report was so puny at 28 Bcf.
However, the new EIA production estimates and rig count data are bearish, which still leads us pointing towards lower NYMEX numbers.
Current rig count is around 980, which is the highest level for the second straight week, while the rig count last year at this time was about 680. Should the rig count continue to climb higher in the weeks to come, we expect this will provide further downward pricing pressure.
Counterpoint: While we’ve seen prompt month gas in the low to mid $4 for some time, even with extreme weather, coal prices have not, and they have continued to rise given the increase in A/C power generation demand. This will likely move the target price that natural gas has to reach in order for natural gas to displace coal-fired generation, thereby limiting greater downside pricing potential for natural gas.
Moving forward: We project the EIA weekly storage injection numbers this week to be smaller than usual, but moving forward we expect injections will exceed the injection numbers posted week-over-week from 2009. Should that occur then it is not unlikely for end of storage season storage volumes to exceed 2009 by 300 Bcf, and exceed the 5-year average by 600 Bcf. These are big numbers.
Carried a bit further, given that there is more storage space available, we could easily exceed 4000 or 4100 Bcf. If we started winter with 4000+ Bcf and then had a mild winter, entering Spring with 2000+ Bcf, a major downward contraction may well be loom in the near future.
Suggestion: Keep your fixed terms short to mid-term. If looking at winter hedges, pick a target price for partial load, looking to transact sometime between August and October. Given where the market has been and where it is today, makes this a lot easier to do.
Lastly, we have a "special report" about basic structural changes that we think brings eye-opening developments to the energy industry. If you would like to hear and read more on the topic, or would like to talk about your energy supply purchasing, please contact us.
Best regards,
| The analysis contained herein is based upon
information gathered from industry analysts, publications, and other
market data, and Bmark Energy believes it to be reasonably accurate.
However, the opinions expressed here are subject to change based on
market and other conditions and Bmark Energy does not guarantee the
accuracy of the analysis. This information should be used for
informational purposes only and Bmark Energy will not be held liable
for any damages resulting from the use of this information. |
Incremental Electric Generation
Sources of Incremental Generation (1989 - 1997)
For most of 1990's, incremental electricity needs could be met primarily
through increased use of existing coal and nuclear capacity.
Sources of Incremental Generation (1997-2020)
U.S. now dependent upon expanded generation from gas-fired units for many
years to come.
Conversion Tables
| 1 CF (cubic foot) = approx 1,000 BTU's |
| 1CCF = 100 CF = 1 Therm |
| 1 Therm = 100,000 BTU's |
| 10 Therms = 1 MMBTU |
| 10 Therms = 1 MCF |
| 10 Therms = 1 Dekatherm |
| 1 MMBTU = 1 Dekatherm |
| 1 MMBTU x 1.054615 = GJ |
| GJ x 0.948213 = 1 MMBTU |
Electricity
As a rule, electricity pricing will be lower when natural gas pricing is
lower. If and when natural gas prices skyrocket, you can expect the same for
electricity rates. Normally all coal-fired generation comes on-line first,
followed by gas fired.
If one can follow the natural gas market into a dip, one
may look to obtain lower priced electricity contracts.
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