Early May Gas Market Update

Published: May 11, 2017

Diversegy is always striving to give our clients resources to help make a proactive and smart decision on your energy; because energy, its what we do.

Here is early May’s market update:

 

Reasons to Buy:

  • Structural demand is projected to continue increasing.
    • When you strip away the effects of the bearish weather we’ve experienced, the supply/demand balance easily flips to bullish.
  • Moving into warmer months, projections of a hot summer (and anticipated cooling demand) will have an increasingly stronger influence.

Reasons to Wait:

  • Current near-term forecasts continue to be mild (low heating and cooling demand for energy).
    • Market fell today amid cooler early summer forecasts.
  • With natural gas production growth projected and significantly higher rig counts versus last year, the market could fall if incremental demand doesn’t show up.

Gas Market Highlights:

  • Last week was the 3rdstorage report and 3rd injection of the 2016-17 Injection Season.  Injection (74 BCF) was in line with analysts’ expectations (67 – 78 BCF).  Storage is now 358 BCF below last year’s level and 299 BCF above the 5 year average.
    • Year over year deficit has decreased 2.7% since the previous week.
    • Surplus over 5 year average has increased 6.0% since the previous week.

June 2017 NYMEX trading at 3.231 after opening at $3.249

Weather Highlights:

  • Next 7 days:
    • 1-6 below normal in the eastern US and 1-6 above normal in the West.
  • Week following:
    • 1-3 degrees below normal in the Northeast and South.

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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