Natural Gas in Underground Storage

The weekly EIA Natural Gas Storage Report advised that there was an injection of 63Bcf (billion cubic feet) into Underground Storage for the week ending August 31st, 2018.

This is 1Bcf above the median forecast of a 62Bcf injection, the average prediction of sector analysts and traders in the Dow Jones Newswires weekly survey. The injection one year ago was 65Bcf and the 5-year average injection is 65Bcf. Storage is 643Bcf below last year for the same week and 590Bcf below the 5-year average. Working gas in storage stands at 2,568Bcf.

Natural Gas Pricing


As of 10:28AM CST, October 2018, (the prompt month) Natural Gas was trading at $2.78, -$0.07 from one week ago and the 1-Year Spread average was $2.74, -$0.07 from one week ago.

Crude Oil Pricing


As of 9:40AM CST, October, 2018, (the prompt month) Light, Sweet Crude on the NYMEX was at $68.72, -$0.94 from one week ago.

Crude Oil Inventory


US crude inventories decreased by 4.3 million barrels to 401.5 million barrels for the week ended August 31st, according to data released yesterday morning by the US Department of Energy. Traders in the Reuters poll projected a drop of 1.3 million barrels.

U.S. Rotary Rigs


U.S. Rotary Rigs drilling for natural gas were +2 at 184 for the week of August 31st. The number of rigs currently drilling for Natural Gas was 1 higher than last year’s level of 103.  US Rigs drilling for oil were +2 at 862. There are 103 more rigs targeting oil than last year. Canadian rigs were -1 at 228 for the week. Rigs targeting oil remain 82% of all US drilling activity.

Geopolitical


U.S. energy operations begin recovering after Storm Gordon: HOUSTON (Reuters)  Energy companies and port operators along the U.S. Gulf Coast took steps on Wednesday to resume operations after Tropical Storm Gordon shut more than 9 percent of the region’s oil and gas output.

Gordon never became a hurricane as forecast and weakened into a depression on Wednesday, just hours after making landfall near the Alabama-Mississippi border, helping to keep production and refining operations running unimpeded at most energy facilities in the Gulf and along the Louisiana coast.

Coast Guard inspectors flew over ports in Mississippi and Alabama to evaluate the facilities, which remained closed on Wednesday morning to most traffic, Petty Officer 3rd Class Alexandria Preston said. In New Orleans, pilots began moving cargo ships through the mouth of the Mississippi River after the storm, said Matt Gresham, a spokesman for the Port of New Orleans. “We had no impacts from the storm and operations resumed as normal this morning,” said Gresham.

Weather

The AccuWeather 1-5 day Outlook forecasts above-normal temps for the Eastern  and Western states, with the exception of Florida, and the Central states. Below-normal and normal temps are forecast for the center of the US. The 6-10 Day Outlook shows above-normal temps most of the  US, with below-normal temps in the Northwest and normal temps for the Southern states.

11-15 Day Outlook  shows a similar picture with expanded high temperatures for much of the country. The 30-day Outlook projects normal temps for most of the US with the exception of Maine and part of the Northwest, which are expected to be at above-normal temperatures.

The 90-Day Outlook shows a similar picture. Hurricane Florence, with sustained winds of 100mph is in the middle of the Atlantic, heading towards the US. Given it's current trajectory, it should make landfall in the Carolinas, creating demand destruction, unlike Hurricane Gordon. Gordon did not form until it was off the coast of Florida and interrupted flow of both Natural Gas and Crude from the Gulf of Mexico.

Sustainability and Renewables


Let the Sun Shine In: Where Is Solar Power Headed? The Solar Energy Industries Association, the national trade association for the U.S. solar industry, reports that solar power has grown in the U.S. at a compounded annual rate of 59% since the solar investment tax credit was implemented in 2006. However, tariffs on certain products, including solar panels, could throw a wrench into solar power’s future prospects.

Roosevelt Island, a sliver of land in the East River next to Manhattan, is the home of Cornell Tech, an engineering campus of Cornell University that opened in September 2017. Its academic hub, the Emma and Georgina Bloomberg Center, was built with innovative architectural designs that feature many sustainable technologies, including solar power (Figure 1). Their electricity bill is $0, thanks to the solar panels high atop the roof that generate enough power to sustain the large and architecturally significant building.

This Week's Key Take-Away


NYMEX Natural Gas futures should continue to trade within a narrow bandwidth this week, as the rig count rose by 2 and storage was only 1Bcf above prediction. Moderate weather has sent the prompt month below $2.80, which had been a spot of resistance in past weeks.

Additionally, generation damage caused by Hurricane Gordon has been almost completely cleaned up and Hurricane Florence could create demand destruction, culminating in lower prices, if there is any movement. Of course, this presupposes that there are no serious fundamental changes to weather or geopolitical issues over the next week.

The capacity issue in Texas due to coal-fed electric generators seems to have abated; this morning, the Spot market for Next Day On-Peak Power was the lowest in the country at $33.54 (see chart below). The Mass Hub continues to be plagued by transportation issues, as new pipelines are hampered by cramped space.



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