Natural Gas Storage
35% Higher Storage Level than Last Year
Since our last report, storage inventories increased 558 BCF; bringing stockpiles OVER the 5-year historic average level by 2%. The storage is 753 Bcf above last year and 44 Bcf above the 5-year average. After the storage report, July prices continued their stable level near the $2.80/therm range. Only the East Region remains below the 5-year average, currently 10.1% under that threshold. Continued storage injections and possible liquefied natural gas imports into the New England area show promise of continued low prices.
Weather Forecast: Summer Looks to be Heating Up for Most of the Country
The summer of 2015 was predicted to be cooler for most of the country. But, recent forecasts have changed, showing most of the U.S. to be above normal temperatures. Only pockets of the Central States and the Northeast look to experience normal to below normal temps. The warmer predictions for the West will compound their water shortage concerns.
Just a reminder that June 1st was the official start of hurricane season. Hurricane season often brings added volatility to the energy markets, as hurricanes may damage oil and gas rigs in the Gulf of Mexico producing region.
Natural Gas futures pricing for July is trading up at $2.81, while July crude oil is trending down $0.86 to $59.10/barrel. The week following Memorial Day saw several consecutive days of declining prices; dropping prices 27.7 cents. July prices have been buoying near the June price of $2.815 and closed down last week at $2.75/MMBtu. While revised weather forecasts continue to show near-term heat for most of the country, longer-term forecasts show more moderatetemperatures. With milder temperatures predicted for most of the country, expect lower generation demands to drive continued strong gas injections throughout the summer.
U.S. natural gas production is expected to increase this week to 72 Bcf/day, while demand will also grow, but only to 64.5 Bcf/day. The over-production will continue to grow inventories and help keep pricing down.
Electricity Prices Quiet
Electric prices have remained quiet over the past weeks and have softened with low gas prices. In general, regional “commodity only” prices are as follows: New England high $40’s to low $50’s/MWH, Mid-Atlantic upper $30’s, Midwest and Ohio Valley low $30’s, and California is in the upper $30’s/MWH.
Energy Prices Start to Bounce Around
Natural gas prices have bounced around the last month to above $3/MMBtu in early May, then settled back down to the $2.80 range. Revised temperatures for this summer appear to be providing further resistance to price increases.
Natural gas storage has moved above the 5-year historic average levels; a significant market threshold. The energy markets look quiet, but hurricane season started June 1st.
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