Back to Normal Levels - Within 1% of 5-Year Average
EIA’s latest Storage Report measured storage levels at 2,428 BCF, a whopping 468 BCF above the same period in 2014. Remarkably, this is climbing to within 1% of the 5-year average level of 2,457 BCF and 24% above last years’ levels. Despite the severe snow storms the Midwest and Northeast experienced, moderate temperatures dampened gas withdrawals from working supply. Storage levels in all three regions (East, West and Producing regions) were above their year-ago levels by 254 BCF, 66 BCF, and 148 BCF, respectively.
Weather Forecast: Mild Temperatures for the Remainder of Winter
The past few weeks brought record snowfall in the Northeast and Midwest and prices continued to fall. February looks to bring below average temperatures to the middle of the country and above average temps west of the Rockies. The 3-month forecast continues to show above average temps west of the Rockies with the regions seeing below average temps shrinking to parts of Texas, Oklahoma, and the Central Plains. The East Coast forecast looks to see normal temperatures throughout the remainder of winter.
This week Natural Gas prices fell to a new 32-month low, settling at $2.584/MMBtu. With predictions of lower than expected gas withdrawals, natural gas prices continue to drop. Storage levels have not experienced large withdrawals and edge closer to matching the 5-year average. The temperature outlook for the remainder of winter looks to be at or above normal temps (except for Texas and the Central Plains). All indicators point to prices staying low.
Today’s early prices for March 2015 continued trading at the $2.59 level, while March Crude Oil is up at $52.23/barrel and heating oil is up 2.24% to $1.809/gallon. The gas strip prices for 2016 through 2021 all closed at all-time lows yesterday. Gas supply helped to drive prices down. While domestic production remained relatively flat, imports from Canada were up 2.9% last week with increased imports to the Northeast and Midwest.
The U.S average retail price of electricity came in at 10.35 ¢/kWH in January down from the prior month of 10.80 ¢/kWH. As natural gas prices go, so goes electricity prices. The largest change in electric rates came from significant hikes in utility default service rates; especially in the Northeast and Midwest.
Winter is at the Half-Way Point and We're Way Ahead of Last Year
Continued mild temperatures (not snowfall) and increased working gas in storage drove natural gas prices down to 32-month historic lows. Average to above average temperatures predicted for most of the country for the remainder of winter bodes well for continued stable and low natural gas prices. Similar to gas, electric prices have shown a drop in prices.
To learn about AUM’s Energy Management solutions, click here.