Natural Gas in Underground Storage

The weekly EIA Natural Gas Storage Report advised that there was an injection of 66Bcf (billion cubic feet) into Underground Storage for the week ending June 22nd, 2018.

This is 9Bcf below the median forecast of a 75Bcf injection, the average prediction of sector analysts and traders in the Dow Jones Newswires weekly survey. The injection one year ago was 72Bcf and the 5-year average injection is 42Bcf. Storage is 735Bcf below last year for the same week and 501Bcf below the 5-year average. Working gas in storage stands at 2,074Bcf. The July Natural Gas contract closed at $2.996.

Natural Gas Pricing


As of 11:11AM CST, August 2018, (the new prompt month) Natural Gas was trading at $2.97, unchanged from one week ago and the 1-Year Spread average was $2.92, -$0.02 from one week ago.

Crude Oil Pricing


As of 11:19AM CST, August, 2018, (the new prompt month) Light, Sweet Crude on the NYMEX was at $73.43, +$8.06 from one week ago.

Crude Oil Inventory


US crude inventories decreased by 9.9 million barrels to 416.7 million barrels for the week ended June 22nd, according to data released yesterday morning by the US Department of Energy. Traders in the Reuters poll projected a decrease of 2.6 million barrels.

U.S. Rotary Rigs


U.S. Rotary Rigs drilling for natural gas were -6 at 186 for the week of June 22nd. The number of rigs currently drilling for Natural Gas was 5 higher than last year’s level of 186.  US Rigs drilling for oil were -11 at 862. There are 104 more rigs targeting oil than last year. Canadian rigs were +21 at 160 for the week. Rigs targeting oil remain 82% of all US drilling activity.

Geopolitical

The most dramatic event in the oil market last week occurred in Canada, not at the OPEC meeting in Vienna, according to Goldman Sachs analysts who say an outage at the Syncrude oil sands facility could lead to a shortage in North America for all of July and shrink stockpiles at the Cushing, Okla., storage hub.

Goldman says the outage will support American oil prices while the OPEC deal to raise production may weigh on Brent crude and lead to a 360K bbl/day shortage for July, which could prompt a further drawdown in Cushing inventories that already have dropped for five weeks with the start of the summer driving season.

“With the global market pricing to pull crude out of the U.S., this loss of U.S. supplies will exacerbate the current global deficit, making the increase in OPEC production all the more required,” Goldman writes. “And while Saudi is already ramping up exports, these will not be delivered until August with June stock draws already accelerating.”

Weather

The AccuWeather 1-5 day Outlook forecasts above-normal temperaturess for most of the Eastern US, with the exception of Florida and below-normal temps forecast for the Northwest. A similar picture is projected for the 6-10 Day Outlook. The 11-15 Day Outlook forecasts above-normal temperatures for the entire country, with the exception of the states bordering the Gulf of Mexico.

The 30-day Outlook projects above-normal temps for the Western half of the US, while the balance of the country will be at normal temps. The 90-day Outlook forecasts the US at normal temperatures with the exception of New England and the Northwest, which will be at above-normal temps.

An El Niño watch was issued in the latest outlook from NOAA, indicating an increasing chance for El Niño conditions to develop later this year. NOAA indicates that ENSO-neutral conditions (neither La Niña or El Niño) will likely last through summer.

Sustainability and Renewables


At this rate, it’s going to take nearly 400 years to transform the energy system: 15 years ago, Ken Caldeira, a senior scientist at the Carnegie Institution, calculated that the world would need to add about a nuclear power plant’s worth of clean-energy capacity every day between 2000 and 2050 to avoid catastrophic climate change. Recently, he did a quick calculation to see how we’re doing.

Not well. Instead of the roughly 1,100 megawatts of carbon-free energy per day likely needed to prevent temperatures from rising more than 2 ˚C, as the 2003 Science paper by Caldeira and his colleagues found, we are adding around 151 megawatts. That’s only enough to power roughly 125,000 homes.

At that rate, substantially transforming the energy system would take, not the next three decades, but nearly the next four centuries. In the meantime, temps would soar, melting ice caps, sinking cities, and unleashing devastating heat waves around the globe.

This Week's Key Takeaway


China Energy Investment Corp. pledged almost $84 billion in shale gas and chemical manufacturing  projects across West Virginia after President Trump’s trade mission to Beijing in November, but when it came time to discuss details, officials were a no-show.

The chief executive and other officers of the world’s largest power company canceled a visit to a petrochemical conference in Pittsburgh, where the projects were to be discussed, casting doubt on their fate amid an escalating trade war between the U.S. and China.

“In light of the ongoing dispute between the U.S. and China on trade, the China Energy team decided right now is not the right time for them to come and visit,” said Brian Anderson. Director of the West Virginia University Energy Institute, an arm of the school that recently signed an memorandum of understanding to work collaboratively with China energy on research and training programs. US exports of Crude and LNG will be affected.


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