Natural Gas:
WE MAY HAVE HIT BOTTOM, AND COLDER WEATHER COULD BRING PRICES BACK
THE MARKET REMAINS VOLATILE ON COMPETING INDICATORS.
- Market volatility has been high, with the colder forecast bumping up against lighter-than-average withdrawals from Natural Gas storage
- After a week where we had a rare mid-winter injection of Natural Gas, the Jan. 13th report came back with a withdrawal of just -82 Bcf. Last year’s withdrawal was -203 Bcf, and the five-year average is -156 Bcf.
- February is forecast to near average temperatures except for some small 3-4 warm fronts. The second half should be warmer than the first as we get closer to Spring.
What Is Henry Hub?
Henry Hub is a natural gas pipeline located in Erath, Louisiana, that serves as the official delivery location for futures contracts on the New York Mercantile Exchange (NYMEX).
EIA NATURAL GAS STORAGE REPORT
The market slipped lower last week, especially after a lighter-than-forecast storage withdrawal. One week after having an actual injection of natural gas (an extremely rare event), we saw a withdrawal of -82 Bcf. This compares to last year, which saw -203 Bcf withdrawn and the five-year average of -156 Bcf.
ADHUB NATURAL GAS VS ELECTRICITY PRICING
The Freeport LNG Facility has still not received the okay to reopen, and the first shipment is not expected to leave the port until mid to late February. This has kept roughly 14 Bcf a week in domestic storage.
Electricity
Since late November, electricity pricing in the PJM Hub has fallen close to $12.00 per MWh (or$0.012 per kWh) and $10.00 per MWh (or a whole penny) since late December.
Winter Weather:
COLD TEMPERATURES ARE HERE
A cold weather front may bring pricing back up from the abnormally low levels we have seen in January, which is one of the warmest on record.
February is expected to be cold in the West, especially in the first half of February, but in the East, we should see normal to above average temps, especially in the second half of the month.
