Cushman & Wakefield and Premiere Energy Auctions have released their Market Energy Update for April 2018. These monthly reports provide an overview of the economic, geopolitical, and meteorological factors affecting the energy market.
Recent cold weather provides extended heating demand.
As we turn toward injection season and the spring shoulder period, it’s important to review and consider the impacts of the preceding winter months. The EIA recently reported a -29 Bcf change in storage, bringing total storage to-date to 1.354 Tcf. One year ago, stocks were 34% higher and we were already into injection season. The recent cold weather through late March and early April has been providing some extended heating demand not typically seen at this point in the year, and as such has provided corresponding price support as natural gas futures have hovered around the $2.70 mark for the better part of the month of March.
Over the coming weeks, the first injection and the more normalized weather patterns expected for the second half of April will temper the bullish sentiments in the market. While the mounting bearish pressure from increased production and decreased heating demand will drive the price of natural gas down, the corresponding increase in power burn should tighten storage levels and increase both the price of natural gas and electricity down the road. How far the seesaw swings back up is entirely dependent upon the delicate balance between production and demand. As of mid-Aril, production remains steady at ~79 Bcf/day and any additional increases in supply will serve to keep a lid on prices.
Other Important Energy Industry News.
- The latest inventory report from the EIA put natural gas stocks at their lowest levels since 2014.
- According to EIA’s forecast, the daily output for 2018 will reach an all-time high of 81.7 BcF/day. That is 8.1 BcF/day higher than in 2017. The all-time high is expected to increase again in 2019 by about 1 BcF/day.
- Governor Cuomo announced the largest commitment to renewable energy by a state in U.S. history at $1.4 billion, which will fund 26 large-scale renewable energy projects, 22 of which are utility-scale solar farms.
To learn more about these developments and to get the latest electricity price trends, natural gas data highlights, and temperature probabilities, read the full energy update.
If you have any questions, Gary Graham, our director of energy management, can take you through the report.