Natural Gas in Underground Storage

The weekly EIA Natural Gas Storage Report advised today that there was a withdrawal of 36Bcf from Underground Storage for the week ending March 22nd, 2019.

This is 5Bcf below the median forecast of a 41Bcf withdrawal, the average prediction of sector analysts and traders in the Dow Jones Newswires weekly survey. This compares with a withdrawal of 66Bcf last year and 41Bcf for the five-year average. Storage is 285Bcf below last year for the same week and 551Bcf below the 5-year average. Working gas in storage stands at 1,107Bcf. 1 more draw on storage is expected prior to storage moving in a positive direction. Lower 48 natural gas production reached an all-time high over the weekend and continues to increase. The April Natural Gas contract closed at $2.69.

The picture above is of a Marcellus Shale outcropping in Western PA. (Read More)

Natural Gas Pricing

As of 9:53AM CST, May 2018, (the new prompt month) Natural Gas was trading at $2.72, -$0.08 from one week ago and the 1-Year Spread average was $2.87, -$0.09 from one week ago.

Crude Oil Pricing

As of 9:03AM CST, May, 2018, (the new prompt month) Light, Sweet Crude on the NYMEX was at $58.88, -$1.25 from one week ago.

Crude Oil Inventory

US crude inventories increased by 7.2 million barrels to 442.3 million barrels for the week ended March 22nd, according to data released yesterday morning by the US Dept of Energy. Traders in the Reuters poll projected a decrease of 0.95 million barrels.

U.S. Rotary Rigs

U.S. Rotary Rigs drilling for natural gas were -1 at 192 for the week of March 22nd. The number of rigs currently drilling for Natural Gas was +2 from last year. US Rigs drilling for oil were -9 at 824. There are 20 more rigs targeting oil than last year. Canadian rigs were -56 at 105 for the week.  Canadian drilling falls rapidly in the spring to avoid environmental damage moving drilling equipment during the spring thaw and rainy season. Rigs targeting oil remain at 81% of all US drilling activity.

Geopolitical

'Coal is on the way out': study finds fossil fuel now pricier than solar or wind; Around 75% of coal production is more expensive than renewables, with industry out-competed on cost by 2025: Around three-quarters of US coal production is now more expensive than solar and wind energy in providing electricity to American households, according to a new study.

“Even without major policy shift we will continue to see coal retire pretty rapidly,” said Mike O’Boyle, the co-author of the report for Energy Innovation, a renewables analysis firm. “Our analysis shows that we can move a lot faster to replace coal with wind and solar. The fact that so much coal could be retired right now shows we are off the pace.”

The study’s authors used public financial filings and data from the EnergyInformation Agency (EIA) to work out the cost of energy from coal plants compared with wind and solar options within a 35-mile radius. They found that 211 gigawatts of current US coal capacity, 74% of the coal fleet, is providing electricity that’s more expensive than wind or solar.. (Read More).

Weather

The AccuWeather 1-5 Day Outlook forecasts the Northeast, Southwest and Northwest at above-normal temps, while the North-Central states and Texas are expected to be below-normal with the rest of the country at normal temps. The 6-10 Day Outlook forecasts the New England, the Southwest and Northwest at above-normal temps with part of the Southeast and North-Central states at below-normal temps, while the rest of the US is forecast to be at normal temps.

11-15 Day Outlook  forecasts most of the country at above-normal temps with the West at normal temps. The 30-Day Outlook shows normal temps for the entire country, with the exception of the far Northwest and New England, which are expected to be above-normal.

The 90-Day Outlook projects normal temps for entire country. A storm system affecting the West right now is taking aim at parts of the Plains, Midwest and East late-week into this weekend with snow, soaking rain and thunderstorms. More rain will soak the Midwest and CA's Sierra Nevada have picked up more than a foot of snowfall.

Sustainability and Renewables

Move Over, Lithium Ion: Thermal Storage Finds a Niche: Thermal storage is gaining ground in refrigeration applications, providing demand response for one of utilities’ most energy-intensive industries.

Industrial refrigeration consumes more energy per cubic foot than any other utility load, said Collin Coker, vice president, sales and marketing, Viking Cold Solutions.

Thermal storage generally involves salt-based solutions that can absorb heat and cool refrigerators. In these applications, thermal storage offers cost advantages over lithium ion batteries, he said.

“From the utility’s perspective, refrigeration is a very intense load and these industrial sites are located all over the place,” he said. The grocery stores and other refrigeration companies often pay high demand charges in areas like California and New England, he added.

“We can shift the load from peak daytime usage to night time usage, and also reduce overall consumption by running refrigerators at night, when they’re more efficient,” he said. (Read More)

This Week's Key Take-Away

NYMEX Natural Gas futures have dropped to below $2.70, which has occurred rarely in the past 5 years. You would have to go back to 2015 to see prices sustained below this level. This week, the weather conditions have finally warmed up substantially across Lower-48 states. A drop in heating demand was especially pronounced in the Southeast and Southwest parts of the country.

Total energy demand (measured in TDDs) should be some 10% below last year's level. Next week, the weather conditions are expected to get even warmer. However, total demand is expected to be 9% higher than the 5-year average due to exports to Mexico and increasing LNG.

In most of the US, this is good news for end users of Natural Gas and electricity as well, the notable exception being Texas, where the key element moving prices is not Natural Gas, (as it has been historically) but generation resources. Texas electric utilities are very concerned over expected record-setting demand this summer as generation has dropped off.