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Weekly Energy Market Update June 23, 2014

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Below is the Direct Energy Business Weekly Energy Market Update video for June 23, 2014. We embedded this video right into the blog post, so you don’t have to leave this page to view it. The written summary is still below too.

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

Prompt month and 12-month strip natural gas prices continue to be range-bound, oscillating between $4.30 and $4.80 since the end of February. The equilibrium seems to be $.4.50, and the market has tended to return to that midpoint after testing the limits of the range. The prompt month lost 21 cents last week, the 12-month strip lost 16 cents, calendar strip ’15 lost 10 cents, and calendar strips ‘16, and ‘17 each lost six cents.

Short-term weather forecasts show a return to normal temperatures for the majority of the country as we head into summer.

Days 1-5: Temperatures up to 5° above normal engulf the Great Lakes states, with a narrow above-normal band extending from there, across the Rockies, to southern California. Normal temperatures are expected for the rest of the country.

Days 6-10:
Warm weather dissipates, as normal temperatures spread across the majority of the U.S.

The EIA reported a record sixth 100+ injection in a row, as the market continues to focus on the pace of storage rebuilding. Gas inventories grew by 113 Bcf for the week ended June 13. This narrowly beat expectations by 3 Bcf, but was much larger than last year (+92 Bcf) and the five-year average (+87 Bcf). Current inventory stands at 1,719 Bcf, which is 706 Bcf (29%) below last year and 851 Bcf (33%) below the five-year average.

This week’s storage report for the week ended June 20 is expected to be around 107 Bcf, adding to the streak of 100+ injections so far this season. This compares to last year’s build of 94 Bcf and a five-year average of 81 Bcf. The EIA is projecting a record-high 2,500 Bcf addition to storage inventories this year, averaging about 90 Bcf/week. The next two storage injections are expected to beat that average, but additions to inventories are expected to taper off after that as we get into July and the accompanying warmer weather.

Posted: June 23, 2014

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