Electricity Headlines: Forward Power Price
Forward power prices were down in all regions besides ERCOT and CAISO which saw increases of 3.3%-4.1% and 3.2%-3.5%, respectively. MISO prices fell 1.3%, and PJM fell between 0.8%-.0.9%
The EIA reported that U.S. electricity customers averaged seven hours of power interruptions in 2021
Weather:
Outlook for November 14-20: Colder than average temperatures will cover most of the U.S. the next 7-days w/rain, snow, and frosty highs of 0s to 40s across the northern U.S., lows of -10s to 20s.
With a fast-approaching and unpredictable heating season now on the horizon, this week’s bearish storage report has done little to cool the NYMEX gas market bulls as recent gains in domestic production continued to overwhelm demand into November.
“The volatility has been crazy the last two days and its shows you how nervous the market is about supplies,” said Phil Flynn, senior account executive at the Price Futures Group, “This market is on a tinder box right now — I don’t think we can afford and any extreme weather events this winter,” he said.
Economy Headlines:
- A Wall Street Journal poll shows that while lower-income Americans feel inflation’s impact the most, top-earning households have become increasingly burdened by rising prices this year.
- As full-time workers feel pinched by inflation, some turn to second part-timer jobs to supplement their incomes.
- Last week, the Federal Reserve raised interest rates 0.75 points at its open meeting.
- The U.S. added 261,000 jobs in October, pointing to a resilient labor market despite recent signs of a cooling economy.
Natural Gas: Weekly Storage Report
- • Working gas in storage was 3,580 Bcf as of Friday, November 4, 2022, according to EIA estimates. This represents a net increase of 79 Bcf from the previous week. Stocks were 37 Bcf less than last year at this time and 76 Bcf below the five-year average of 3,656 Bcf. At 3,580 Bcf, total working gas is within the five-year historical range.
Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2017 through 2021. The dashed vertical lines indicate current and year-ago weekly periods. - EIA estimates U.S. natural gas inventories ended October 2022 at more than 3.5 trillion cubic feet (Tcf), which is 4% below the five-year average and higher than what we had been forecasting in recent months. They fall in our forecast by 2.1 Tcf this winter to 1.4 Tcf by the end of March 2023. This withdrawal would be similar to the five-year average and result in inventories that are 8% below the five-year average at the end of March 2023.
- Because of higher-than-expected storage levels heading into winter, the EIA forecast natural gas spot price at Henry Hub averages about $6 per million British thermal units (MMBtu) across 4Q22 and 1Q23, which is more than $1/MMBtu lower than we forecast in the October STEO. In addition, the EIA expects natural gas prices will decline after January as the deficit to the five-year average in inventories decreases.
- Also, the EIA expects renewable sources to provide 22% of U.S. electricity generation in 2022 and 24% in 2023. Generation from natural gas declines from 38% in 2022 to 36% in 2023. The increase in renewables generation comes mostly from solar and wind capacity additions.
- Higher heating oil prices and consumption will result in the average U.S. home using heating oil as its primary space heating fuel will see expenditures increase by 45% compared with last winter. In last month’s Winter Fuels Outlook, the EIA forecasted costs would rise 27% over last winter in the baseline.
Natural Gas Demand for the Week: High
The latest EIA weekly natural gas storage report printed a build of +79 Bcf, barely smaller than market expectations near +81-82 Bcf and much larger than the 5-year average of +20 Bcf. The injection increased supplies from 3,508 Bcf to 3,580 Bcf, while improving deficits to -76 Bcf.
