MARKET COMMENTARY. Energy and Sustainability Solutions Energy Market Roundup. North America. November 20, 2014 MARKET FUNDAMENTALS OIL PRICE UPDATE

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1 PRICING As unseasonably cold weather and early season snowstorms have blanketed much of the Midwest and Northeast, and natural gas market volatility has reacted predictably. Volatility in the prompt month gas contract has doubled since the beginning of November, with daily market moves in November averaging +/- 2.9%, compared to the +/- 1.5% daily average observed in September and October. The December 214 natural gas futures contract closed at $4.371/MMBtu on November 19th, up $.186/MMBtu over the previous week, as the Gulf Coast (including the Henry Hub) escaped the worst of the winter weather. Today, the EIA reported working gas in storage of 3,594 Bcf, a net storage withdrawal of 17 Bcf. This represents the first storage withdrawal of the winter season, higher than analyst estimates of a 9 to 13 Bcf withdrawal. Current storage levels are 21 Bcf less than last year and 244 Bcf below the five-year average. Cold weather is expected to put continued pressure on gas prices, as the six-to-ten day weather forecast calls for below-average temperatures for much of the continental U.S. All of the West Coast and portions of the Northeast are expecting above-average temperatures over the next week, while the rest of the country is expecting belowaverage weather. Market participants have now begun to fear that the early season cold will lead to aggressive storage withdrawals and a repeat of last winter s extreme price spikes. Energy Commodities Price $/MMBtu Trend Natural Gas (MMBtu) $4.37 $4.37 Crude Oil (Barrel) $7 $11.85 Gasoline (Gallon) $2.4 $17.77 Diesel (Gallon) $2.36 $18.8 Propane (Gallon) $.73 $7.97 PRB Coal ($/ton) $11.1 $.63 Central APP Coal ($/ton) $51.6 $2.8 Power (On-Peak) (MWh) Price Trend PJM Power $54.54 Mass Hub $ ERCOT Power (North) $38.69 NYISO G (Off-Peak) $56.17 NI Hub $42.88 NP-15 Power $49.55 SP-15 Power $49.2 Basis Strip (MMBtu) Price Trend Centerpoint East ($.9) Transco Z6 Non-NY $3.15 TETCO M-3 $.44 Chicago Citygate $.56 Northern NG - Ventura $.64 Northwest PL - Rocky Mts $. Houston Ship ($.3) PG&E Citygate $.29 SOCAL $.16 Sumas $.21 The WTI December contract closed at $74.58/Bbl on November 19th, down $2.6/Bbl from the previous week. The Brent crude January contract is down $3.2/Bbl to $78.1.Bbl over the previous week. The spread between the Brent crude and WTI January contracts narrowed to $3.6/Bbl, down $.37/Bbl over the previous week. For more information, please contact your local Siemens representative or us at energyroundup.industry@siemens.com

2 USD/Gal USD/MMBtu USD/MWh PRICING PRICING Henry Hub Natural Gas Forward Prices On-Peak Electricity Forward Prices 2. 11/19/214 Last Week Last Quarter Year ago 11/19/214 Last Week Last Quarter Year ago PJM Western Hub NYISO Zone Zone A A Mass Mass Hub Hub ERCOT ERCOT North North SP-15 SP-15 PRICING DATA New York Harbor Heating Oil Forward Prices /19/214 11/19/214 Last Last Week Last Quarter Last Quarter Year ago Year ago Source: New York Mercantile Exchange (NYMEX) / Pace Global 2

3 PRICING Working Natural Gas in Storage 2, Billion Cubic Feet (Bcf) 4,2 3,7 3,2 3,7 2,7 2,2 4,7 4,2 3,2 2,7 Stocks Total Crude Oil and Petroleum Million Barrels (MMBbl) 4,7 2,2 2, 1,9 1,9 11/1/1 1/3/11 4/3/11 7/29/11 1/27/11 4/24/12 11/1/1 1/21/12 1/3/11 4/3/11 7/29/11 1/27/11 1/25/12 4/24/12 7/2 3/11 4/3/11 7/29/11 11/1/1 1/25/12 1/3/11 4/3/11 7/23/12 7/29/111/21/12 1/27/11 1/25/12 4/24/12 7/23/12 7 1/27/11 1/25/12 4/24/12 7/23/12 1/21/12 7 1,5 1,5 Current Storage Level Current Storage Level Five-Year Range Current Storage Level Current Storage Level Current Storage L Source: Energy Information Agency (EIA) / Pace Global Natural gas storage levels are below last year s level and below the 5-year average The EIA reported an injection of 17 Bcf compared to a 1 Bcf 5-year average injection *Stocks data current as of November 5, 214 Thousands of Contracts 3 3 Natural Gas Commercial vs. Non-Commercial Positions (1) (1) (2) (2) (3) (3) Non-Commercial Non-Commercial Net Net Position Position Commercial Net Net Position Position Commercial Click here for information on Commercial vs. Non-Commercial Positions. 3 The spread between commercial and non-commercial net positions narrowed

4 Number of Rotary Rigs Number of Rotary Rigs PRICING Near-Term Weather Forecast Three-Month-Forward Weather Forecast 6-1 Days Nov 214- Jan 215 Source: National Oceanic and Atmospheric Administration (NOAA) / Pace Global Weekly U.S. Rotary Rig Count Weekly U.S. Rotary Rig Count by Drilling Type 1, , ,4 1, Oil Oil Rotary Rigs Natural Natural Gas Gas Rotary Rotary Rigs Rigs Directional Horizontal Vertical Vertical Source: Baker Hughes / Pace Global The short-term forecast calls for below-average temperatures for most parts of the country The gap between domestic oil and natural gas rig counts widened 4

5 MACD Level USD/MMBtu PRICING Natural Gas Technical Market Timing Indicator The Standardized Sentiment Index (SSI) 12-month strip SSI Buying Region Hedge per Protocol Don t Hedge No Attenuation Full Attenuation (.1) (.2) Natural Gas December 214 Contract Moving Average Convergence-Divergence (MACD) The downward market movement has pushed the technical indicator inside of the buying range Pace Global currently recommends floating the market unless client specific policies, procedures or objectives dictate price fixing Divergence MACD Signal Line December- 14 Contract Price 5

6 PRICING A successful Risk Management Program should have a structured and clearly defined approach to hedging. Energy commodities are among the most volatile commodities traded and, as such, a hedge program should be designed to limit the risk associated with these extreme forward market events. In a downward moving market, a hedge program can help mitigate unfavorable mark-tomarket outcomes that can result from an overly aggressive strategy. In an upward moving market, a hedge program can reduce the risk associated with an unexpected price spike. While hedging is never risk free, a well structured hedge program will help energy intensive corporations understand their exposure to energy volatility and improve their energy cost certainty. Below you will find the Value-at-Risk (VaR) associated with various hedge levels for both fixed (hedged) positions and open positions at current market prices. Value At Risk (VaR) Consumer s Perspective Values reported reflect 12 forward months price-risk factors applied to 1 MMBtu held open or closed for the next week at current market prices VaR-OP $.29 The risk of price movement to the upside for the next five days, measured with 97.5-percent confidence. VaR-OP is indicative of the risk of market price movements carrying unhedged (open) positions to higher levels, resulting in a higher cost to consumers. Upper Price Confidence Band $4.291 The price resulting from adding the VaR- OP to the price of open positions. This would represent the upper band of price exposure for open positions over a fiveday horizon with 97.5-percent confidence. VaR-FP $.268 The risk of price movement to the downside for the next five days, measured with 97.5-percent confidence. VaR-FP is indicative of the risk of price movements causing a divergence between fixed positions and market price. Such a divergence would result in lost opportunity to participate in lower cost consumption. 6

7 PRICING Open-Position Risk (VaR-OP) with Varying Hedged Positions % 1% 2% 3% 4% 5% 6% 7% 8% 9% 1% Dec-14 $.498 $.448 $.398 $.348 $.299 $.249 $.199 $.149 $.1 $.5 $ - Jan-15 $.492 $.443 $.394 $.345 $.295 $.246 $.197 $.148 $.98 $.49 $ - Feb-15 $.467 $.421 $.374 $.327 $.28 $.234 $.187 $.14 $.93 $.47 $ - Mar-15 $.436 $.393 $.349 $.35 $.262 $.218 $.175 $.131 $.87 $.44 $ - Apr-15 $.23 $.27 $.184 $.161 $.138 $.115 $.92 $.69 $.46 $.23 $ - May-15 $.29 $.188 $.167 $.146 $.126 $.15 $.84 $.63 $.42 $.21 $ - Jun-15 $.22 $.182 $.162 $.141 $.121 $.11 $.81 $.61 $.4 $.2 $ - Jul-15 $.195 $.175 $.156 $.136 $.117 $.97 $.78 $.58 $.39 $.19 $ - Aug-15 $.191 $.172 $.153 $.134 $.115 $.96 $.76 $.57 $.38 $.19 $ - Sep-15 $.19 $.171 $.152 $.133 $.114 $.95 $.76 $.57 $.38 $.19 $ - Oct-15 $.19 $.171 $.152 $.133 $.114 $.95 $.76 $.57 $.38 $.19 $ - Nov-15 $.174 $.156 $.139 $.122 $.14 $.87 $.69 $.52 $.35 $.17 $ - Average $.29 $.261 $.232 $.23 $.174 $.145 $.116 $.87 $.58 $.29 $ - Fixed-Position Risk (VaR-FP) with Varying Hedged Positions % 1% 2% 3% 4% 5% 6% 7% 8% 9% 1% Dec-14 $ - $.45 $.89 $.134 $.179 $.223 $.268 $.313 $.357 $.42 $.447 Jan-15 $ - $.44 $.89 $.133 $.178 $.222 $.266 $.311 $.355 $.399 $.444 Feb-15 $ - $.42 $.85 $.127 $.169 $.212 $.254 $.296 $.339 $.381 $.423 Mar-15 $ - $.4 $.79 $.119 $.159 $.198 $.238 $.278 $.318 $.357 $.397 Apr-15 $ - $.22 $.43 $.65 $.87 $.18 $.13 $.152 $.173 $.195 $.217 May-15 $ - $.2 $.4 $.59 $.79 $.99 $.119 $.139 $.159 $.178 $.198 Jun-15 $ - $.19 $.38 $.57 $.77 $.96 $.115 $.134 $.153 $.172 $.192 Jul-15 $ - $.19 $.37 $.56 $.74 $.93 $.111 $.13 $.148 $.167 $.185 Aug-15 $ - $.18 $.36 $.55 $.73 $.91 $.19 $.127 $.146 $.164 $.182 Sep-15 $ - $.18 $.36 $.54 $.73 $.91 $.19 $.127 $.145 $.163 $.181 Oct-15 $ - $.18 $.36 $.54 $.73 $.91 $.19 $.127 $.145 $.163 $.181 Nov-15 $ - $.17 $.33 $.5 $.66 $.83 $.1 $.116 $.133 $.15 $.166 Average $ - $.27 $.54 $.8 $.17 $.134 $.161 $.187 $.214 $.241 $.268 This report is intended solely for the clients of Siemens and Pace Global, a Siemens business ( Pace Global ). This report may contain some forward looking statements and opinions which are based on historical and/or current information that relate to future operations, strategies, financial results or other developments. Certain unanticipated factors, including without limitation, regulatory developments, technological changes, and general economic conditions could cause actual results to differ from the statements and opinions contained in this report. We make no guarantees, endorsements or warranties, express or implied, as to the validity, accuracy or completeness of the information contained in this report, nor of the actual results that our clients may generate based on the information or by following the recommendations, if any, contained in this report. Additionally, Siemens and Pace Global assume no responsibility for the results of any actions and inactions taken on the basis of this report. By a party using, acting or relying on this report, such party consents and agrees that Siemens and Pace Global, its employees, directors, officers, contractors, advisors, members, affiliates, successors and agents shall have no liability with respect to such use, actions, inactions, or reliance. Past performance is not indicative of future results. Any unauthorized disclosure, use or dissemination, either whole or partial, is prohibited. Siemens Industry, Inc. Building Technologies 1 Deerfield Parkway Buffalo Grove, IL 689 (847) Siemens Industry, Inc. For more information, please contact your local Siemens representative or us at energyroundup.industry@siemens.com 7