Energy4Business » Market Intelligence

Potential for the Warmest Winter in 62 Years

Lack of weather related demand this winter has driven the natural gas market toward 10-year lows and allowed inventory stockpile levels to reach all-time highs. Data from the Energy Information Administration (EIA) through the week ending January 27 reports that natural gas storage levels are at 2,966 Bcf, about 375 Bcf higher than the previous record high of 2,571 Bcf set in 2007 during the same week. In addition, the surplus in storage levels to last year and the five-year average continues to expand as a result of 12% lower population-weighted heating degree days (HDD) versus the 30-year average.
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NYMEX Natural Gas Has a Volatile Week: Production Cuts & Weather Forecasts

On Jan. 23, the NYMEX February gas contract hit a 10-year low of $2.231/mmbtu, a price last seen in March 2002. Monday began what turned out to be a volatile week as Chesapeake Energy (CHK), the second largest gas producer, announced revisions to their 2012 outlook with an immediate cut in gas production and the possibility of further cuts. The announcement sent the NYMEX rallying 38 cents, or as much as 17% on Monday and further gains were made throughout the week. On Thursday, the rally stalled as weather forecasts for February continued to come in warmer than normal, returning

Will Natural Gas Storage Reach Full Capacity?

Underground natural gas storage is at a record level and is poised to stay that way throughout the remainder of 2012. The glut of natural gas stems partly from the energy industry’s success with new and more efficient drilling techniques that has allowed production to skyrocket in areas known as shale formations. While production has been increasing, demand for natural gas has not been able to keep up, forcing producers to put their natural gas into storage. The mild winter across the country has added to the supply/demand imbalance. During the winter season, natural gas is withdrawn from storage to
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Natural Gas Prices Crumble Below $3 As Mild Weather Remains In Forecast

After holding at the psychologically important level of $3/MMBtu for several days, the natural gas prices on the Nymex finally broke down this week after forecasts for mild weather led to fears that sustained heating demand would not arrive this winter. Prices for February delivery opened the week at $3/MMBtu but quickly declined through and are currently $2.65/MMBtu, a drop of 12% on the week and bringing prompt month prices to the lowest settlements seen since September 2009. Although some of the major weather forecasters to the energy industry have noted there will be bursts of winter weather over
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CSAPR Rule Postponed

On December 30, 2011 the United States Court of Appeals for the D.C. Circuit issued a ruling to stay the controversial Cross-State Air Pollutions Rule (CSAPR), which was scheduled to take effect on January 1, 2012. The CSAPR regulation is designed to reduce power plant emissions in 27 states that the Environmental Protection Agency (EPA) claims contribute to harmful levels of Sulfur Dioxide (SO2) and Nitrogen Oxide (Nox), byproducts of the combustion process. The D.C. Circuit Court is scheduled to hold hearings as early as April 2012 to rule on full merits of case. In the meantime the EPA
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Implications of the Maximum Achievable Control Technology (MACT) Standard

The EPA has revealed the final rules that would curb mercury and 84 other toxic chemicals from U.S. power plants. These rules would implement a provision of the Clean Air Act (CAA) known as the Maximum Achievable Control Technology (MACT) standard or Mercury and Air Toxics Standards (MATS). The EPA believes they will affect about 1,400 coal-fired units and oil-fired units at about 600 power plants that emit harmful pollutants. The EPA ruling has given coal and oil plants until 2016 to comply with the rules and finish their retrofits and/or closures. Critics of the MACT rule have argued
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Snowpack’s Influence On Winter Heating Demand

Both natural gas and power prices continue to experience considerable downward pressure due to the persistent above average temperatures present in the eastern two-thirds of the country. Weather-related demand, which is typically measured in Heating Degree Days (HDD’s), has been significantly lower than normal this winter. This lack of demand has delayed the price support that we typically see at this point of the heating season. The HDD’s from Nov. 1, 2011 to the current day are -13% lower than the same period last year and are -8% lower than the 30-year normal. As a result, the prompt-month natural gas
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Today’s Energy Environment

Today’s energy environment is riddled with a number of significant factors that can affect your bottom line. Sluggish economic activity, record high natural gas production, and the EPA Clean Air Act rulings are all influencing the world of energy, and ultimately you as a consumer. Environmental Policy Changes: New and pending governmental regulations will most likely be an additional contributing factor to prices in 2012 and beyond. One such factor is the Cross State Air Pollution Rule (CSAPR), which was released by the Environmental Protection Agency (EPA) on July 7, 2011. This rule requires 27 states to significantly reduce
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Recent Economic Indicators Show U.S. Economy Gains Footing

A series of reports out this week indicate that the U.S. economy may be in better shape than perceived just two months ago. Then, a string of slowdowns in regional manufacturing indexes had the markets concerned that the U.S. economy could be slipping into recession. Since then, several indicators have improved and while a severe slowdown in Europe could impact the U.S., economic growth here will likely remain moderate going into 2012. Over the past two weeks several regional Federal Reserve Banks all reported regional Manufacturing indexes that had improved and were flat or back in positive territory. On
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The Impact of Our New All-Time Record for Natural Gas Storage

Well, it happened. We have a new all-time record for natural gas storage. With the release of the U.S. Energy Information Administration’s (EIA’s) natural gas storage report Thursday morning, total domestic natural gas inventories rose last week by 19 bcf to 3.85 trillion cubic feet (tcf). This is a new all-time record for natural gas storage, surpassing the previous record of 3.84 tcf set in November 2010. And as we look a little further into the future, chances are we’ll see two more records set this month as current weather forecasts suggest the mild start to winter will linger
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