Friday, June 3, 2016

Natural Gas: EIA Weekly Supply/Demand Report

If temperatures don't quickly ramp up, expect a dramatic reversal of the recent bull run due to the storage overhang.
$2.405, flat, last.
From the Energy Information Administration:
In the News:
Use of natural gas for power generation ticks upward
Warm summerlike weather in recent days has led to increased consumption of natural gas for power generation (power burn), as air-conditioning demand ramped up, according to data from PointLogic. Power burn on May 31 was at its highest level so far this year, at 31.2 billion cubic feet (Bcf), as temperatures reached into the 80s and 90s in many areas of the United States. Temperatures are expected to remain warm in the coming days.
Consumption of natural gas for power generation, April รข€“ September
Consumption of natural gas for power generation has remained relatively high in recent years, with 2015 setting a record high for natural gas burned for power generation. So far in 2016, average power burn has exceeded 2015 levels by 8.6%, or 2.0 Bcf per day (Bcf/d), according to PointLogic. The U.S. Energy Information Administration expects that this trend will continue, with EIA's current Short-Term Energy Outlook forecasting that power burn in 2016 will exceed last year's record by 4.0%. Additionally, EIA forecasts that for the year, natural gas generation as a share of total generation will exceed coal for the first time on record. Much of the growth in power burn is coming from the Southeast, the largest consuming region in the United States. The Southeast showed a 10.4% increase in power burn from May 2015 to May 2016.

Low natural gas prices and growth in natural gas power generation infrastructure are the main driving factors behind this consumption growth. While the summer season is generally the time of year when power burn is highest, because of air-conditioning demand, gas consumption for power generation has also been rising in the winter, as natural gas makes up a larger share of baseload generation.

Spot prices rise with temperatures. The Henry Hub spot price rose by 49¢, from $1.77/MMBtu last Wednesday to $2.26/MMBtu yesterday. This is the highest Henry Hub spot price since January. Prices at most other market locations saw similar increases, as much of the United States experienced early summer heat. At the Chicago Citygate, prices rose from $1.77/MMBtu to $2.24/MMBtu, Wednesday to Wednesday. At the PG&E Citygate in California, the spot price rose from $1.82/MMBtu to $2.40/MMBtu over the report week....MUCH MORE