WEATHER HIGHLIGHTS:
As projected, natural gas prices have fallen in the last week, with prompt-month pricing falling almost below $3.00. Since the start of November, natural gas prices have lost $0.60 from $3.62 to $3.018 on Friday. This drop coincided with a change in the weather forecast, which called for milder temperatures than initially forecast.
WEATHER: 6-10 DAY AND 8-14 DAY OUTLOOK
The weather outlook for the upcoming days indicates above-average temperatures across much of the United States until Friday, particularly in the Midwest and Ohio Valley. Northern regions can expect highs in the 50s-60s, while the southern US will experience pleasant conditions with temperatures ranging from the 60s to 80s. However, heavy showers will be along the Gulf Coast due to a slow-moving weather system.
A change in weather is anticipated as a cool shot moves across the Midwest and Northeast from Saturday to Monday. This will bring rain and snow, accompanied by cooler temperatures in the 40s. Despite this, most of the country will still enjoy relatively nice weather.
NATURAL GAS HIGHLIGHTS:
Due to the mild fall, we have recently seen demand in almost all sectors fall. Natural Gas demand is lower in residential, commercial, industrial, and power burn. This could also be partly due to a possible drop in economic production as job numbers were down significantly last month from September.
EIA NATURAL GAS STORAGE REPORT:
NO STORAGE REPORT LAST WEEK: IS NO NEWS GOOD NEWS?
Because of a systems upgrade, the EIA did not release a Natural Gas Storage Report last week.
- The EIA will resume regular data reporting on November 13th, with the Natural Gas Storage Report being released for TWO weeks on November 16th.
- The projection for the injection/withdrawal in the storage report last week was anywhere from -20 to +20. This could have a significant psychological impact as an unfavorable report or withdrawal would be the first of the year and would likely send pricing up. If this happens two weeks in a row, expect any rise or fall in gas pricing to be much more volatile.
- Thursday could see a significant change in pricing one way or the other.
ELECTRICITY: FORWARD POWER PRICES
Electricity pricing in both the BGE HUB and the AD HUB have seen near pricing fall dramatically while future pricing climbs steadily. This may very well be a sign that the market is solidifying its prediction that this winter will be mild and see lower demand, similar to last year.
PJM BGE FORWARD POWER PRICES
PJM ADHUB FORWARD POWER PRICES
WHAT IS FORWARD POWER PRICING?
Forward power pricing is a financial mechanism used in the energy industry, particularly in the electricity market. It involves the pricing and trading of electricity for future delivery at a predetermined price. This mechanism allows electricity producers, consumers, and traders to hedge against price fluctuations in the electricity market and manage their risk exposure.
NYMEX 12-MONTH ROLLING STRIP
Pricing could significantly change this Thursday. The previous week’s EIA Natural Gas Storage Report comes out every Thursday at 10:30 AM.
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 of 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.
