Energy Market Update-January 2018
Edge Insights energy experts are constantly monitoring energy market conditions in order to help ensure the best possible pricing and contract terms for our clients. The following report is a snap shot of current conditions intended to help our clients stay informed of market dynamics.
Natural Gas Market Overview:
Temperature forecasts have turned bullish in regards to natural gas market prices since Christmas, however a more normal temperature range is showing for later in January. Gas storage level expectations for end of winter have been reduced and now are similar to the ‘Polar Vortex’ winter of 2014. Gas production is strong, but with the ever increasing exportation of LNG and Mexico piped gas, will storage rebound in time for next winter?
Natural Gas Storage Update:
The storage report for week ending 12/29 shows a withdrawal of 206 Billion Cubic Feet (Bcf). This puts levels at 5.8% below the 5-year average by 99 Bcf, and 76 Bcf below last year at this time. Current percentage of capacity is now at 71.5%.
- Short term; 3 to 4 week forecasts show a reduced demand across the high population areas of the northeast, with cooler conditions to the northwest. (outlook map on right)
- Gas production has been impacted by cold temperatures, however still strong in the overall market picture, running 7% over last January.
Bullish: (higher prices)
- Natural gas end-of-season storage level expectations have been reduced due to the period of extreme cold. Additionally, gas wells are forced to close because of freezing liquids produced during the extraction process. This will have a negative effect on storage.
- Exports are forecasted to increase by February to 12% above this time last year.
Electric Generator Alternative:
We have come to depend on the electric grid to be a reliable source of electric power, and for the most part, it is. If you have the occasional power failure, which for some can be costly, there are alternatives to using backup generators. If you have natural gas, you could use Co-Generation, or CHP (Combined Heat & Power). This can guarantee not only a reliable electric power source, but heat as well. Depending on your situation, you may be able to setup a Co-Gen solution at zero cost, and have a budgeted low cost for your electric. Let our representatives know if you want more information.
Energy Saving Products:
Systems to monitor electric usage are becoming more popular with the need to find ways to minimize and become more efficient. The electric bill only shows kWh usage, but by using a monitoring system, you can evaluate cost of production, identify invalid equipment cycles, determine savings for retrofitting LED technology, and prevent equipment failures and downtime. This solution does not only apply to manufacturing, but multi-unit housing, or commercial and retail businesses. To learn more about this energy saving solution, contact our office at 610-777-3200 to setup an onsite evaluation.
Timing purchases is important due to high market volatility as we continue through the high heat demand months.
The market opportunity is a ranking of how we perceive timing of contract purchases or hedging natural gas or electric.
Information provided by the Energy Division of Edge Insights, Inc.