The weekly EIA Natural Gas Storage Report advised that there was a withdrawal of 194Bcf (billion cubic feet) from Underground Storage for the week ending February 9th, 2018.
Natural Gas in Underground Storage
This is 13Bcf above the median forecast of a 181Bcf withdrawal, the average prediction of sector analysts and traders in the Dow Jones Newswires weekly survey. The withdrawal one year ago was 120Bcf and the 5-year average withdrawal is 54Bcf. Storage is 577Bcf below last year for the same week and 433Bcf below the 5-year average. Working gas in storage stands at 1,884Bcf.
Natural Gas PricingAs of 9:24AM CST, March 2018, (the prompt month) Natural Gas was trading at $2.57, - $0.14 from one week ago and the 1-Year Spread average was $2.75, -$0.07 from one week ago.
Crude Oil PricingAs of 9:28AM CST, March, 2018, (the prompt month) Light, Sweet Crude on the NYMEX was at $60.36, -$1.12 from one week ago.
Crude Oil InventoryUS crude inventories increased by 1.8 million barrels to 422.1 million barrels for the week ended Feb 9th, according to data released yesterday morning by the US Department of Energy. Traders in the Reuters poll projected an increase of 2.8 million barrels.
U.S. Rotary RigsU.S. Rotary Rigs drilling for natural gas were +3 at 184 for the week of February 9th. The nmber of rigs currently drilling for Natural Gas was 35 higher than last year’s level of 149. US Rigs drilling for oil were +26 at 791. There are 200 more rigs targeting oil than last year. Canadian rigs were -17 at 325 for the week. Rigs targeting oil remain at 81% of all US drilling activity.
With the U.S. set to become a dominant player in the global market for liquefied natural gas, officials and consultants at the S&P Global Platts annual LNG conference in Houston say the U.S. will need to ramp up exports in the coming years as increasingly efficient drilling methods create a domestic supply glut."We're going to have too much gas with nowhere to go," says Renato Pereira, VP of business development and marketing for Tellurian. Steven Winberg, the U.S. Energy Department's assistant secretary for fossil fuels, says the U.S. has six projects underway in Texas, Louisiana, Georgia and Maryland that will support LNG exports of more than 10B cf/day.
WeatherThe AccuWeather 1-5 day Outlook forecasts above-normal temperatures for 3/4 of the US. Only the North-Central and Northwest states are projected to be at normal or below-normal temps.
The 6-10 Day Outlook forecasts warmer-than-normal temps for the Eastern half of the country with the Northwest at below-normal temps and the Southwest at normal temps. The 11-15 Day Outlook forecasts the Northeast and Southern half of the country at above-normal temps with the Northwest at below-normal temps. The 30 and 90-day Outlook shows mostly normal temps for the majority of the US with the Southern states above-normal temps and the far North of the US below-normal.
Sustainability and RenewablesAs expected, the Trump administration's new budget slashes programs funding renewable energy research, allocating far more money to clean coal development.
The Trump administration’s latest budget proposal released on February 12, 2018 could have major consequences for the future of renewable energy in the U.S. If Congress approves the budget, it would cut the Office of Energy Efficiency and Renewable Energy’s funding by more than half, and completely elimination of the Advanced Research Projects Agency-Energy (ARPA-E) program.
ARPA-E is a program that issues grants to energy startups from across the country. The program was nearly discontinued in 2017, but Congress awarded it an additional $15 million that ensured its survival for another year.
This Week's Key Takeaway
Natural Gas prices have continued their downward slide and the near-term forecast (by Accuweather) is for warmer-than-normal weather for most of the country. There is some disagreement on which weather forecast will be accurate- NOAA us projecting colder weather for the Northeast at the end of February. Evidently, this has something to do with extreme weather events expected in Greenland.
Wholesale electric prices have moved down and New England electric ISO prices have finally dropped precipitously. With the exception of California, ISOs in the chart below indicate spot prices + $.025/kWh. Depending on your contract termination date, this is a good time to lock-in pricing. The market is no longer backward dated and we are seeing flat curves going out several years. New Natural Gas generation is expected to grow dramatically in 2018.
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