Natural Gas Storage
Storage Leaps Above 5-Year Average Again
The recent Energy Information Administration reported a 68 Bcf withdrawal from natural gas stockpiles. This withdrawal is a bit more bullish than the 61 Bcf predicted, but still much lower than the 5-year average of 129 Bcf. Storage levels sit at 7.7% below this same period in 2016 and 18.8% above the 5-year average. After several weeks of storage sitting at or below the 5-year average, stockpiles have once again climbed above the 5-year average.
If temperatures remain cooler this week, we could see a withdrawal over 100 Bcf.
Weather Forecast:Will Last Week's Cold Blast Continue?
Both the 30-day and 90-day temperature forecasts are predicting above average temperatures across most of the continental U.S. The remainder of March looks to have warm temperatures across all states except those bordering Canada, where they will experience average temperatures. You will have to travel to the northwest corner of the country to find below average temperatures. Oklahoma and Northern Texas may experience temperatures well above normal. The 90-day outlook again shows above average temperatures across most of the country, except in the northwest third of the states where they will feel normal temperatures.
This past week’s winter blast nudged prices higher.
Prices Bounced Up After the Weekend's Chill
April natural gas contracts are trading higher by about a nickel to $3.06/MMBtu. Last week, prices jumped 6.4%. This increase is a result of our recent weekend cold spell in the Midwest and East. Prices are predicted to fall back under $3.00 if temperatures are moderate over the next two weeks. If temperatures remain cool, prices could move to the $3.25 level. Most future strips are up about 10¢.
The uptick in natural gas prices has also pushed up power prices. Most notably, Pennsylvania, New Jersey, Maryland and NY prices have bounced up after setting all-time lows last week.
Natural GasPricesResisted Last Month's Upward Movement
The last winter storm that pushed through the Midwest and East has pushed heating demands up 30% higher than the 10-year average for the week. Natural gas prices jumped in concert with the heating demand, as expected. With prices above the $3.00/MMBtu threshold, near-term temperatures become the primary driver for the remainder of March. Another cold blast could push prices up to the next plateau of $3.25.
If you missed locking in prices last week, you may not see sub-$3 gas for a while. More importantly, you may have missed out on very low power prices. Stay tuned to AUM to see when to buy power.