Author Archives: Richard Meyer

Richard Meyer Natural Gas Market Indicators: December 15, 2016

Natural gas demand in the lower-48 climbed above 100 Bcf on December 8, a first for the 2016–17 winter and the highest consumption level since February. If arctic air moves into North America and temperatures drop and stay low, we’re likely to see a number of 100+ Bcf days during December. Supplies are still well positioned to meet this uptick in demand.

Storage inventories are still at about 3.9 Tcf; production remains above 70 Bcf per day; and pipeline and LNG imports are there to help meet additional pulls on the system. However, the market has decided that supplies are going to be needed sooner rather than later. Natural gas moved into normal backwardation in early December.

With January 2017 contracts calling for a premium to subsequent months, traders may be sending signals that even more supplies could be needed to meet a January cold snap. All is dependent on where temperatures go from here. The market is poised and ready to meet whatever demand is thrown at it. Visit this link to download the full Natural Gas Market Indicators report. Topics covered in this week’s report include: Reported Prices, Weather, Working Gas in Underground Storage, Natural Gas Production, Shale Gas, Rig Counts, Pipeline Imports and Exports, and LNG Markets.

Please direct questions and comments to Chris McGill at cmcgill@aga.org or Richard Meyer at rmeyer@aga.org.

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Richard Meyer Natural Gas Market Indicators: November 14, 2016

Relatively low acquisition prices, an extraordinarily warm summer and retiring coal-fired power generation combined to push natural gas volumes for power generation in the lower-48 to new highs in 2016. Natural gas spot prices failed to close above $3.00 per MMBtu at any time during the summer, in turn creating a market dynamic ripe for coal-to-gas re-dispatch on the electric grid. But that wasn’t the only coal-to-gas dynamic; the 22 gigawatts of coal-fired power plant capacity retired during the past two years also created new demand for natural gas. And this past summer turned out to be the hottest of any in 50 years.

The combined effects of these factors meant that from April through October gas draws for power generation averaged 30 Bcf per day, which is 6 percent higher than last year and 18 percent higher than the five-year average. Remarkable demand indeed. Now as we approach winter, heating loads in small volume markets will predominantly shape the market—that is, if it ever gets cold across a significant portion of the country. Storage inventories are elevated and in record territory. Production is strong and stable. Even rig counts are starting to rise once again. In all, North American natural gas supplies are robust while, for the most part, temperatures are mild—a recipe for modest forward pricing.

Visit this link to download the full Natural Gas Market Indicators report. Topics covered in this week’s report include: Reported Prices, Weather, Working Gas in Underground Storage, Natural Gas Production, Shale Gas, Rig Counts, Pipeline Imports and Exports, and LNG Markets.

Please direct questions and comments to Chris McGill at cmcgill@aga.org or Richard Meyer at rmeyer@aga.org.

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Richard Meyer Natural Gas Market Indicators: October 28, 2016

Gas-directed drilling bumped up during the past several weeks with price increases of $3 per MMBtu and more. But now in late October, natural gas pricing at Henry Hub is below $3 again, and the market will look for reasons to sustain the earlier momentum. Storage inventories are strong, so the one ingredient missing to frame the coming winter is heating degree days.

Will the winter for the majority of the country mean fewer (warmer than normal) or more than average heating degree days (colder than normal)? If it is cold, will it be sustained over large regions or hit and miss? Local natural gas utilities always plan for the possibility of reaching a peak design day and thus serving firm customers and others without interruption. Now Mother Nature will determine the targets to be managed with all of the resources currently in place to assure reliable, affordable service.

Visit this link to download the full Natural Gas Market Indicators report. Topics covered in this week’s report include: Reported Prices, Weather, Working Gas in Underground Storage, Natural Gas Production, Shale Gas, Rig Counts, Pipeline Imports and Exports, and LNG Markets.

Please direct questions and comments to Chris McGill at cmcgill@aga.org or Richard Meyer at rmeyer@aga.org.

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Richard Meyer Natural Gas Market Indicators: October 14, 2016

Oil-directed drilling is up 35 percent as measured by Baker-Hughes rig activity since late May 2016 and gas drilling is up 16 percent from the end of August. Much of the drilling increase is attributed to increased oil and natural gas wellhead prices – oil now over $50 per barrel and natural gas above $3 per MMBtu. These energy prices remain great values for consumers while injecting just a little more money into the upstream sector, which is not a bad thing.

We will continue to watch storage inventories and heating degree day data to see what they will say about the robustness of natural gas demand to begin the winter heating season. Remember, the winter heating season of November 2015-March 2016 was the winter that wasn’t, as national heating degree days came in 17 percent fewer (warmer) than normal. A return to any semblance of normal may mean residential and small commercial users consume more natural gas during the heating season and thus overall bills may increase.

AGA will host a media briefing on Wednesday, October 19, to present expectations for peak month natural gas supply and demand as we move into the 2016-17 winter heating season. Experts from AGA will discuss the winter outlook for the natural gas market including market stability, natural gas bills for consumers, U.S. natural gas imports and exports, the global LNG market as well as energy efficiency and the benefits of the direct use of natural gas. An open question and answer session will follow the presentation. If you are a member of the media and would like to RSVP, please email jbavaro@aga.org.

Visit this link to download the full Natural Gas Market Indicators report. Topics covered in this week’s report include: Reported Prices, Weather, Working Gas in Underground Storage, Natural Gas Production, Shale Gas, Rig Counts, Pipeline Imports and Exports, and LNG Markets.

Please direct questions and comments to Chris McGill at cmcgill@aga.org or Richard Meyer at rmeyer@aga.org.

Posted in Natural Gas Market Indicators, weather, winter heating | Leave a comment