Energy Market Update - Late August

Published: August 28, 2017


The energy market is a fugal but amazing market to track. For the average consumer, it is important to know when to jump on that low rate and when to hold off. Below is the energy market update written by one of our energy experts.

Reasons to Buy:

  • Weather normalized demand continues to grow.
    • Several new LNG facilities coming online in the next year.  At least 90,000MW of new natural gas generation currently being developed (150+ new plants to be online by 2020.)
    • Mexican gas exports expected to double by 2019.
  • Market will turn bullish quickly depending on how hot it gets (cooling demand.)

Reasons to Wait:

  • Colder than average weather has kept prompt month gas under $3.
    • Continued cool weather forecasted for the rest of August.
  • With natural gas production growth projected and significantly higher rig counts versus last year, the market could fall if incremental demand doesn’t keep up.
    • 182 gas rigs (+1 this week) vs. 83 gas rigs last year.
    • Since June, production has averaged 1.0 BCF/day higher year-on-year.

Gas Market Highlights:

  • Last week was the 19thstorage report and 19th injection of the 2017 Injection Season.  Injection (53 BCF) was within analysts’ expectations (42-54).  Storage is now 254 BCF below last year’s level and 55BCF above the 5 year average.
    • Year over year deficit has decreased 10.6% since the previous week.
    • Surplus over 5 year average has increased 5.8% since the previous week.

  • September 2017 NYMEX trading at 2.962 after opening at $2.894.

Weather Highlights: 

  • Next 7 days:
    • 0-6 below normal for the middle and eastern US, 1-3 above normal in the West.
  • Week following:
    • 0.5-6 below normal for the middle and eastern US, 1-6 above normal in the West.

Note:  Although natural gas does not necessarily indicate where electricity pricing is at, it is good as a general barometer for electricity markets as a whole.  When gas gets expensive, so does electricity generated from natural gas.


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