Natural Gas – Energy – Electricity – Weather Headlines
EIA: WEEKLY NATURAL GAS STORAGE REPORT
A lower-than-expected injection into gas storage saw the cost of Natural Gas rises thirty cents since last Wednesday in the prompt month.
Also contributing was the forecast for hotter temperatures in late June. Even next winter has risen almost 15 cents in the previous few days and is approaching four dollars.
WHY DO WE ALWAYS TALK ABOUT THE PRICE OF NATURAL GAS?
THE PRICE OF NATURAL GAS CORRELATED TO THE PRICE OF ELECTRICITY
The answer is simple.
The weather and the cost of Natural Gas are two of the most significant contributing factors to the price of electricity. Natural gas accounts for almost 40% of electricity generation. As the price of gas rises and falls, so does the cost of electricity.
MAIN FACTORS IN DECLINING ENERGY PRICES
The three main factors for the decline in energy prices this year have been:
- The fire at the Freeport LNG facility halted approximately 2.3 Bcf day from export and kept that gas in the domestic market.
- The increase in production to a 100+ bcf a day level.
- The 4th warmest winter on Earth in recorded history, leading to a reduction in demand.
For us to have the type of pricing next year that we have had this year, producers would have to do the exact opposite of what they plan on doing (Lowering production), we would have to have a near record warm winter, and we would have to count on another LNG facility catastrophe (the opposite is projected with four more LNG facilities online by 2026). Pricing right now might be as good as it gets for a while.
WEATHER: 6-10 DAY AND 8-14 DAY OUTLOOK
