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Weekly Energy Market Update: October 13, 2014

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Below is the Direct Energy Business Weekly Energy Market Update for October 13, 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.  

Natural Gas Basis / Weather
• Significant 2014-15 winter gas basis declines in the Northeast and Mid-Atlantic regions over the past two weeks, but prices remain higher year-over-year
• November 1 gas pipeline expansions that can access Utica/Marcellus to increase Northeast gas production, impact basis spreads 
• In many Northeast regions, negative basis brings delivered natural gas costs near coal parity next summer
• Early November and December forecasts call for temperatures warmer than last year but near 10-year and 30-year normals

Natural Gas Commodity
• November futures finished the week at $3.85 per MMBtu, down $0.19
• Since July 17, prompt month natural gas futures have traded between $3.80 – $4.10 per MMBtu
• Domestic natural gas production set a new record of 69.8 Bcf/day on October 9 (Bentek)
• 12-month strip near 10-year lows, longer dated prices at/near all-time lows
• Thursday’s storage injection (+105) was below expectations, but was 25th consecutive injection to beat the 5-year average

Power Markets
• Electricity prices decline with natural gas commodity/basis in most non-constrained regions 
• EPA MATS (Mercury and Air Toxics Standards) Rules to be effective April 2015, could prompt more coal plant retirements and increase gas fired generation above what has been announced

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Posted: October 13, 2014