Energy Market Update – Early July

Published: July 10, 2017

The energy market is constantly keeping us on our toes. Make sure to lock in your deals today before these rates disappear. Here is early July’s energy market update:

Reasons to Buy:

  • Weather normalized demand continues to grow.
    • Both takeaway capacity from the Northeast and LNG export capacity are increasing.
  • Now that we’re in the warmer months, cooling demand will have an increasingly stronger influence.

Reasons to Wait:

  • Current forecasts for average summer temps may keep 5 year surplus intact heading into winter.
    • Bigger gas markets towards Southeast and Middle Atlantic had cooler than normal temperatures last week.
  • 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.
    • 189 gas rigs (+5 this week) vs. 88 gas rigs last year.

Gas Market Highlights:

  • This week was the 13th storage report and 13th injection of the 2017 Injection Season. Injection (72 BCF) was above analysts’ expectations (54-68). Storage is now 285 BCF below last year’s level and 187 BCF above the 5 year average.
    • Year over year deficit has decreased 10.6% since last week.
    • Surplus over 5 year average has increased 3.3% since last week.

  • August 2017 NYMEX trading at 2.854 after opening at $2.899.

Weather Highlights:

  • Next 7 days:
    • 1-2 below normal for the East, 1-6 above normal in the West.
  • Week following:
    • 1-6 above normal in the Central US, normal temperatures in the Southeast.

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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