WEEKLY MARKET UPDATE

Transcription

1 WEEKLY MARKET UPDATE Weekly Summary: The U.S. Energy Information Administration reported last week that natural gas storage decreased by 183 Bcf. The withdrawal for the same week last year was 230 Bcf while the five-year average withdrawal is 203 Bcf. Total U.S. natural gas in storage stood at 2,584 Bcf last week, 12.5% less than last year and 12.3% less than the five-year average for this time of year. Despite record withdrawals last week, prices for the prompt month (February) NYMEX strip fell 0.4 cents to $3.185 as the US National Weather Service forecasts a high probability of above average temperatures in the Northeast and Upper Midwest through January. Spot prices across the U.S. have returned to more normal ranges now that the cold snap has passed. spot prices in ERCOT () reached a record high $2,200/MWh mid-last week as cold weather lifted winter demand to a new record of 65,000 MW, just 10% shy of the region s peak summer demand. While spot price changes of 110x are not typical in ERCOT, the region does not have capacity market, which means power plant owners must generate all their revenue through the wholesale market. Therefore, plant owners rely on critical peak pricing or scarcity events to cover their fixed costs. The influx of cheap solar, wind, and natural gas onto the ERCOT grid threatens to decrease the frequency and intensity of critical peak pricing events in future years. A Bloomberg New Energy Finance report estimated that each gigawatt of solar added to ERCOT could decrease average wholesale power prices by $2.56/MWh during summer peaks. This may be good news for energy users, but threatens to alter power plant economics. On the other hand, if events of the last week are any indication of the future, the trend to electrify residential heating in the region seems likely to drive increased volatility in the future. On January 19th, 2018 the Federal Subcommittee on Energy from the House Energy and Commerce committee considered the Unlocking Our Domestic LNG Potential Act, a bill that would repeal restrictions on the export of natural gas to countries with which the U.S. does not have a free trade agreement. Supporters argue that domestic LNG suppliers would benefit from the ability to export natural gas without DOE approval, while the opposition fears the legislation would hurt the manufacturing sector due to higher domestic prices induced by exportation of domestic supply. Demand for LNG is growing, even amongst United States trade partners. Mexico imported approximately 660MMcf/d of LNG in 2017, a 22% increase from the previous year. Mexico s dependence on LNG imports will continue to rise in 2018, as Mexican gas production declines and several pipeline projects experience significant delays due to legal opposition from indigenous groups, setting the average delay at 380 days. NYMEX - Annual s Henry Hub 2018 (balance of) Henry Hub 2019 Henry Hub 2020 $3.40 $ / MMBtu $2.90 $2.40 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 NYMEX Summary Prompt Month: Front Month: : NYMEX Feb 2018 Mar 2018 Close () % Change from Last Week $ % $ % $ % $ % EIA Storage Summary Total (Bcf) Current levels vs Previous years (Bcf) % Difference - Current vs Previous years Injection/ Withdrawal : Storage Inventories This week 2, Same week - Last year 5 Year Average for this week 2,952 2, % -12.3% 1

2 Annual Forward s - Basis Algon Gates 2018 (balance of) Algon Gates 2019 Algon Gates 2020 $2.00 $1.50 $1.00 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Algon Gates, Basis Summary % Change % Change % Change % Change 2018 $1.725 $ % $ % $ % $ % 2019 $1.769 $ % $ % $ % $ % 2020 $1.785 $ % $ % $ % $ % $45.H.Internal_Hub $43 $41 $39 $37 $35 ISO-NE NEMA Power Movement % Change % Change % Change % Change $ $ % $ % $ % $ % 2

3 Annual Forward s - Basis $1.20 Transco Z 6 NY 2019 Transco Z 6 NY 2020 Transco Z 6 NY 2018 (balance of) $0.70 $0.20 Transco Zone 6 NY, Basis Summary % Change % Change % Change % Change 2018 $0.480 $ % $ % $ % $ % 2019 $0.429 $ % $ % $ % $ % 2020 $0.403 $ % $ % $ % $ % $46 N.Y.C - J $44 $42 $40 $38 $36 NYISO - Lower Hudson Valley Power Movement % Change % Change % Change % Change $ $ % $ % $ % $ % 3

4 Annual Forward s - Basis $0.30 Tetco M Tetco M Tetco M (balance of) $0.10 -$0.10 -$0.30 Tetco M3, Basis Summary % Change % Change % Change 2018 $0.068 $ % -$ % $ % -$ $0.000 $ % -$ % $ % -$ $ $ % -$ % $ % -$0.052 % Change 157% 99.8% -15.1% $38 PJM East $36 $34 $32 $30 PJM BGE, Power Movement % Change % Change % Change % Change $ $ % $ % $ % $ % 4

5 Annual Forward s - Basis $0.10 $0.00 -$0.10 -$0.20 SoCal Border 2019 SoCal Border 2020 SoCal Border 2018 (balance of) -$0.30 -$0.40 SoCal Border, Basis Summary % Change % Change % Change $ $ % -$ % -$ % -$0.117 % Change % $ $ % -$ % -$ % -$ % $ $ % -$ % -$ % -$ % $36 SP15 $34 $32 $30 $28 $26 CAISO SP15, Power Movement % Change % Change % Change % Change $ $ % $ % $ % $ % 5

6 Annual Forward s - Basis $0.08 $0.03 Houston Ship Channel 2019 Houston Ship Channel $0.02 -$0.07 -$0.12 Houston Ship Channel % Change % Change % Change % Change $ $ % -$ % -$ % $ % $ $ % -$ % -$ % $ % $ $ % -$ % -$ % $ % $34 Houston Zone $32 $30 $28 $26 ERCOT Houston Zone % Change % Change % Change % Change $ $ % $ % $ % $ % 6

7 Annual Forward s - Basis $0.00 -$0.20 NW Sumas 2019 NW Sumas 2020 Houston Ship Channel 2018 (balance of) -$0.40 -$0.60 -$0.80 -$1.00 NW Sumas, Basis Summary % Change % Change % Change % Change $ $ % -$ % -$ % -$ % $ $ % -$ % -$ % -$ % $ $ % -$ % -$ % -$ % Annual Forward s -Basis $0.08 FGT Z FGT Z FGT Z (balance of) $0.04 $0.00 -$0.04 -$0.08 FGT Z 3, Basis Summary % Change % Change % Change % Change $ $ % -$ % -$ % $ % $ $ % -$ % -$ % $ % $ $ % -$ % -$ % $ % 7