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Weekly Energy Market Update November 6, 2013

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Weekly Energy Market Update video for November 6, 2013.

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

NYMEX prices plummeted last week and yesterday, with most contracts hitting their all-time lows. The December '13 contract dipped to $3.44 (a new low), the 12-Month Strip hit $3.57 (just above $3.55 from the August low), and Calendars '14, '15 and '16 hit $3.60, $3.83 and $3.98 respectively - all-time contract lows for each.

The price dips illustrate the market's response to November weather turning mild, a bearish storage report last Thursday, shale gas and related pipeline activity (new record production > 66.5 Bcf/day), new production area pipeline capacity in the Marcellus/Utica region that frees supply, and the Spectra Energy New York-New Jersey pipeline coming online.

Last week the EIA reported an injection of 38 Bcf for the week ending Oct. 25. This was above expectations (33 Bcf), below last year (66 Bcf) and above the 5-year average (36 Bcf). Current inventory is 3,779 Bcf, which is only 3.1% below last year and now 1.6% above the 5-year average.

Lack of demand, confidence in ongoing supply growth and moderate near-term weather have prevailed over any bullish outlook and winter premiums are gone. While there’s always a possibility of more downside, prices took a big dip last week and there is still tremendous ongoing winter risk, especially in New England. In addition, coal-to-gas switching could dramatically pick up if prices reach the $3.25 to $3.00 range - especially in PJM and the Southeast.

Based on current NYMEX pricing, this is a great opportunity to take winter risk off the table for near-term purchases and capitalize on all-time lows for future contract terms. Long-term fundamentals remain relatively bullish compared to near-term, due to EPA regulations, LNG exports and expected increases in industrial demand.

Other News

New Legislation Being Considered by PA to Fully Open the Market to Electric Competition
The Pennsylvania state legislature is currently considering a new bill, the Electric Competition Benefits Enhancement Act (SB 1121). This Act proposes to create a fully competitive retail electric market in the state, while continuing to ensure that customers have access to reasonable and reliable electric service. We are encouraging our customers to reach out to their state legislator(s) to show their support for a fully competitive retail electric market. To learn more about the legislation and how you can show your support, click here.

Posted: November 06, 2013