Natural Gas in Underground Storage

The weekly EIA Natural Gas Storage Report advised that there was a withdrawal of 19Bcf (billion cubic feet) from Underground Storage for the week ending April 6th, 2018.

This is 6Bcf above the median forecast of a 13Bcf withdrawal, the average prediction of sector analysts and traders in the Dow Jones Newswires weekly survey. The injection one year ago was 9Bcf and the 5-year average injection is 9Bcf. Storage is 725Bcf below last year for the same week and 375Bcf below the 5-year average. Working gas in storage stands at 1,335Bcf.

Natural Gas Pricing

As of 9:57AM CST, May 2018, (the prompt month) Natural Gas was trading at $2.68, +$0.01 from one week ago and the 1-Year Spread average was $2.83, -$0.01 from one week ago.

Crude Oil Pricing

As of 9:29AM CST, May, 2018, (the prompt month) Light, Sweet Crude on the NYMEX was at $66.08, +$2.31 from one week ago.

Crude Oil Inventory

US crude inventories increased by 3.3 million barrels to 428.6 million barrels for the week ended April 6th, according to data released yesterday morning by the US Department of Energy. Traders in the Reuters poll projected a decrease of 0.6 million barrels.

U.S. Rotary Rigs

U.S. Rotary Rigs drilling for natural gas were unchanged at 194 for the week of April 6th. The number of rigs currently drilling for Natural Gas was 29 higher than last year’s level of 165.  US Rigs drilling for oil were +11 at 808. There are 136 more rigs targeting oil than last year. Canadian rigs were -23 at 111 for the week. Rigs targeting oil rise 1% to 81% of all US drilling activity.

Geopolitical

China, the world’s largest emitter of greenhouse gases, is determined to rebalance its energy mix and incorporate more clean energy. That determination is reflected in the money it put into renewable energy last year, dwarfing spending by the next biggest investor, the US.

Last year nearly half of the world’s new renewable energy investment of $279.8 billion (pdf, p.11) came from China, according to a report published April 5 by Bloomberg New Energy Finance, and the sustainable energy finance center run by the United Nations Environment Program and the Frankfurt School of Finance and Management. China’s investment in renewable energy.

Weather

The AccuWeather 1-5 day Outlook forecasts below-normal temperatures for the Center of the US and much of the Northwest with the  balance of the country at above-normal or normal temps. The 6-10 Day Outlook forecasts the entire North and part of the Southeast of the country at below-normal temps, with the balance of the states at above-normal or normal temps.

The 11-15 Day Outlook forecasts the North at below-normal temps, the Central states at normal temps and the South at above-normal temps. The 30 and 90-day Outlook projects the most of the country at normal temps with the South at above-normal temps.

Sustainability and Renewables

Research gets closer to producing revolutionary battery to power renewable energy industry: Any resident of the Great Plains can attest to the massive scale of wind farms that increasingly dot the countryside. In the Midwest and elsewhere, wind energy accounts for an ever-bigger slice of U.S. energy production: In the past decade, $143 billion was invested into new wind projects, according to the American Wind Energy Association.
However, the boom in wind energy faces a hurdle -- how to effectively and cheaply store energy generated by turbines when the wind is blowing, but energy requirements are low.

This Week's KeyTakeaway

As we continue to wait for Underground Storage to show net Natural Gas flowing into Underground Storage, prices have traded in a very narrow bandwidth. The injection season is now two weeks old but it will be another week or two before we see positive flow into Storage. The spot market for electricity prices continues to be relatively low but should drop further when Natural Gas flow reverses.

However, pricing for contracts in those states experiencing generation plant closures (like Texas and New Jersey) continue to see higher quotes due to summer heat rates, as the utilities are concerned about capacity issues.