Energy Marketing Update - Late September

Published: September 21, 2017

Diversegy thrives on helping businesses reduce cost, mitigate risk, and improve their bottom by introducing an energy strategy to your existing business. However, you aren't an energy expert and we don't expect you to be! Below is our bi-monthly energy market update. Read it in full to be fully educated enough to make the right decision when buying your energy.

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.
      • Already back up to pre-Harvey average of 4.3 BCF/day
    • Market will turn bullish quickly depending on weather.
      • Warmer weather forecasted the next two weeks.
      • ~5 weeks left before we start discussing withdrawals, focus is shifting to winter heating forecasts.

Reasons to Wait:

  • 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.
    • Production
      • 186 gas rigs (-1 this week) vs. 89 gas rigs last year.
      • Even with production relatively flat compared to last year and reduced imports form Canada, injections have still averaged 1.4 BCF/day higher than last year (due to reduced demand).
    • Demand
      • Gas consumption (excluding exports) this injection season has averaged nearly 4.0 BCF/d less than last year, mostly from reduced power generation demand.
      • Multiple hurricanes have impacted short-term demand as we approach the end of the withdrawal season.
      • Power outages and rain providing cool weather – reduced Mexico and LNG exports.

Gas Market Highlights:

  • Last week was the 23rdstorage report and 23rd injection of the 2017 Injection Season.  Injection (91 BCF) was within analysts’ expectations (70-94).  Storage is now 179 BCF below last year’s level and 43 BCF above the 5 year average.
    • Year over year deficit has decreased 15.6% since the previous week.
    • Surplus over 5 year average has increased 186.7% since the previous week.

  • October 2017 NYMEX trading at 3.156 after opening at $3.151.

Weather Highlights:                                                                                                                                                                                                                                            

  • Next 7 days:
    • 2-6 above normal for most of the East and Midwest.  2-6 below normal in the West.
  • Week following:
    • 0-3 above normal for most of the East and Midwest.  1-6 below 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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