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Weekly Energy Market Update November 18, 2013

By Direct Energy Business
Energy Market Update

Weekly Energy Market Update for Nov. 18, 2013 from Randy Burns, Senior Analyst, Market Intelligence.

The following is a summary of last week’s market activity and the market outlook:

Just two weeks after hitting all-time lows, natural gas contracts saw strong upward swings in response to short-term forecasts showing cold temperatures. The Prompt Month was up 10 cents from its low ($3.37 on Nov. 5), the 12-Month Strip was up 6 cents since its relative low ($3.55 on Nov. 4), and Calendars '14, '15 and '16 were up 1 cent from their Nov. 4 contract lows.

Market response to cold weather is especially being felt in the Northeast, where the Algonquin Winter Basis gained $4 in November. Fear of a cold winter, coupled with maintenance on the Algonquin Pipeline, has contributed to the large increase.

After this week, forecasts up and through December are calling for temperatures well below-normal for the eastern half of the country.

On Thursday, the EIA reported an injection of 20 Bcf for the week ending Nov. 8. This was slightly below expectations of 23 Bcf, above 2012 (12 Bcf withdrawal) and above the 5-year average of 19 Bcf. End of year storage is expected to be about 3,834 Bcf, which is below the 3,952 Bcf peak we saw in 2012.

OTHER NEWS

New England Pipeline Constraints Result in ISO Winter Reliability Plan and Added Costs for Consumers in the Region

In 2012, the New England energy market experienced serious reliability issues that resulted in extreme price volatility from late December 2012 through the end of February 2013. As a result, the FERC approved ISO-NE's plan to enact a Winter Reliability Program for 2013-2014. This program is intended to aid ISO-NE in maintaining reliability during the 2013-2014 winter by procuring up to 2.4 million MWh of energy from a combination of oil-fired generators, dual-fuel generators and demand response assets. As a result, businesses located in New England will be impacted by the cost of this program during its duration (December 2013 and January-February 2014).  Click here to read more.

 

Posted: November 18, 2013

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