Natural Gas in Underground StorageThe weekly EIA Natural Gas Storage Report advised today that there was a withdrawal of 204Bcf from Underground Storage for the week ending March 7th, 2019.
This is 4Bcf below the median forecast of a 208Bcf withdrawal, the average prediction of sector analysts and traders in the Dow Jones Newswires weekly survey. The withdrawal compares with a withdrawal of 93Bcf last year and 97Bcf for the five-year average. Storage is 359Bcf below last year for the same week and 569Bcf below the 5-year average. Working gas in storage stands at 1,186Bcf. There are 2 weeks left in the historical withdrawal season.
The picture above is of the Cheniere Corpus Christi, Texas Liquefied Natural Gas plant, which began exporting LNG in December of last year.
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Natural Gas Pricing
As of 10:03AM CST, April 2018, (the prompt month) Natural Gas was trading at $2.84, -$0.02 from one week ago and the 1-Year Spread average was $2.98, -$0.01 from one week ago.
Crude Oil Pricing
As of 9:38AM CST, April, 2018, (the prompt month) Light, Sweet Crude on the NYMEX was at $58.55, +$1.91 from one week ago.
Crude Oil Inventory
US crude inventories decreased by 3.9 million barrels to 449.1 million barrels for the week ended March 8th, according to data released yesterday morning by the US Dept of Energy. Traders in the Reuters poll projected an increase of 2.7 million barrels.
U.S. Rotary Rigs
U.S. Rotary Rigs drilling for natural gas were -2 at 193 for the week of March 8th. The number of rigs currently drilling for Natural Gas was +15 from last year. US Rigs drilling for oil were -9 at 834. There are 38 more rigs targeting oil than last year. Canadian rigs were -22 at 189 for the week. Rigs targeting oil remain at 81% of all US drilling activity.
IEA: Another U.S. shale revolution is coming: "The second wave of the U.S. shale revolution is coming," the IEA said in its annual five-year oil outlook report. "This will shake up international oil and gas trade flows, with profound implications for the geopolitics of energy."
U.S. crude production is expected to account for 70% of the total increase in global production capacity by 2024, while total exports of crude and refined products should reach 9M barrels a day, surpassing Russia and rival Saudi Arabia.
Saudi Arabia currently exports about 7 million barrels of crude oil each day, along with 2 million barrels of natural gas liquids and petroleum products, but the U.S. is set to top that record this year, becoming the world's leading exporter of oil and liquids. The milestone, which has never happened since Saudi Arabia began selling oil overseas in the 1950’s, has been driven by the transformative shale boom.
ExxonMobil said this week that its soaring production in the Permian Basin can generate an average return of more than 10%, even at just $35/ barrel.
WeatherThe AccuWeather 1-5 Day Outlook forecasts below-normal temps for the Western half of the US. The East Coast is expected to be at above-normal temps with the balance of the country at normal temps, including the West Coast. The 6-10 Day Outlook forecasts the East and South at below-normal temps with the West Coast and Northwest above-normal and the balance of the country at normal temps.
11-15 Day Outlook forecasts the Northeast at above-normal temps with the balance of the US at mostly normal temps. The 30-Day Outlook shows normal temps for the entire country, save the North-Central states, which are expected to be below-normal and Florida, which is expected to be above-normal.
The 90-Day Outlook projects normal temps for the entire country, with the exception of the far Northwest, which is expected to be at above-normal temps.
A "bomb cyclone" is dumping snow and heavy rain on the central US, leaving tens of thousands without electricity. 105 million people are under a storm warning.
Sustainability and Renewables
The new, safer nuclear reactors that might help stop climate change: From sodium-cooled fission to advanced fusion, a fresh generation of projects hopes to rekindle trust in nuclear energy.
BP might not be the first source you go to for environmental news, but its annual energy review is highly regarded by climate watchers. And its 2018 message was stark: despite the angst over global warming, coal was responsible for 38% of the world’s power in 2017—precisely the same level as when the first global climate treaty was signed 20 years ago. Worse still, greenhouse-gas emissions rose by 2.7% last year, the largest increase in seven years.
Such stagnation has led many policymakers and environmental groups to conclude that we need more nuclear energy. Even United Nations researchers, not enthusiastic in the past, now say every plan to keep the planet’s temperature rise under 1.5 °C will rely on a substantial jump in nuclear energy.
But we’re headed in the other direction. Germany is scheduled to shut down all its nuclear plants by 2022; Italy voted by referendum to block any future projects back in 2011. And even if nuclear had broad public support (which it doesn’t), it’s expensive: several nuclear plants in the US closed recently because they can’t compete with cheap shale gas. (Read More ...)
This Week's Key Take-Away
The term "demand destruction" in electric terms means lowering the need for electricity. While cold weather and snow normally means a larger draw on electricity for heating, in extreme events, electric usage actually goes down.
How is this possible? With the weather event that we are seeing in the Midwest currently, the storms are so powerful that they are taking down electric lines. As a result, homes and businesses are without power and therefore, actual demand for electricity drops.
The Wall Street Journal recently had a good front page article about the challenges facing the nation’s utilities. For decades, electricity sales and consumption went hand-in-hand with economic growth. In the last several years, not so much. Electricity retail sales peaked at 3.903 trillion kilowatt-hours in 2014, dropped in 2015, recovered a tiny amount in 2016, and fell to 3.82 trillion kilowatt-hours in 2017. 2018 numbers are not in yet.
There’s another form of electricity in which demand destruction is starting to become evident: lighting. An LED bulb uses between 70 and 80% less electricity to produce the same amount of light as an incandescent light bulb. Replacement of incandescant bulbs has been widespread and the only holdouts are those homes and businesses who still have their old bulbs.