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EIA: WEEKLY NATURAL GAS STORAGE


Our gas injections continue to be weak this summer, and we will still be lucky to have a surplus by the end of withdrawal season starting in November. Our surplus over the 5-year average, at one time over 17%, is now down to 5.1%. The excess over last year has plummeted to just 9.0%.

WEATHER FORECAST: 6-10 DAY AND 8-14 DAY OUTLOOK

A robust cold front moving in from the West could bring our first actual dose of heat demand. This increased cooling will be the first time a large portion of the country will turn on their heaters.

We have had relatively regular injections in the last few weeks; however, they are not as high as last year. We could soon see our first withdrawal of the season just in time for the start of the withdrawal season, November 1st.

ELECTRICITY: FORWARD POWER PRICES


October has seen cooler weather, lower injections, and increased electricity pricing in the BGE Hub and the ADHub. Pricing has risen about $1.50 per Mwh, though we did see a drop in the last week. You can expect electricity pricing to more closely follow weather patterns soon. A mild winter could see pricing remain stable, and an abnormally cold winter could see it rise.

This possible volatility is by comparison to the five-year average. With the average temperature seemingly rising every ear, that normal temperature is becoming milder for this time of the year. We are also seeing more extreme temperatures throughout the year so while that mild weather could keep pricing generally low, the extreme weather events will cause sharp ups and downs in the market. Far more often than in the past.

NYMEX 12-MONTH ROLLING STRIP

ALL ABOUT THE NYMEX TWELVE-MONTH STRIP

  • The NYMEX Twelve Month Strip is the average of the upcoming 12 months of closing Henry Hub natural gas futures prices as reported on CME/NYMEX.
  • A futures strip is the buying or selling futures contracts in sequential delivery months traded as a single transaction.
  • The NYMEX Twelve Month Strip can lock in a specific price for natural gas futures for a year with 12 monthly contracts connected into a strip.
  • The average price of these 12 contracts is the particular price that traders can transact at, indicating the direction of natural gas prices.
  • The price of the NYMEX Twelve Month Strip can show the average cost of the next twelve months’ worth of futures.
  • The NYMEX Twelve Month Strip is also used to understand the direction of natural gas prices and to lock in a specific price for natural gas futures for a year.