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Monday Nov 5, 2018   
Over the weekend, the weather forecast got a lot colder across the Midwest, Ohio Valley and the Northeast.  In fact, some model runs have the frigid weather dropping down into the South Central and Southeast parts of the country.  This type of weather pattern has ignited the front end of the forward curve as the prompt month (December) is up $0.19 before trading begins.  The beginning of the New Year (Jan-Feb) is up between $0.13 and $0.15 as the fear of natural gas consumption early in the season will expose the fact that the storage facilities are already almost 1 TCF behind being full and roughly 623 BCF lower than last year to start the winter. Figure 1 | Lower 48 Natural Gas Storage - Weekly EIA Storage has been an ongoing concern for some time as several key regions ... » read more
Friday Nov 2, 2018   
General Electric has come upon some really tough times lately. At the beginning of 2017 GE’s stock price stood right around $31 per share. The stock has lost more than two-thirds of its value since then. They have experienced cuts large and small in the last year. In June it was removed from the Dow Jones Industrial Average where it had been a member continuously since 1907. In September GE announced the failure of several turbine blades in its new machines causing the stock to fall 4% in a day. Figure 1 | GE - The New Symbol  At the beginning of October they announced that CEO John Flannery was being shown the door after just over a year, being replaced by board member Larry Culp. The stock enjoyed a rare 15% bounce on the news. Mr. Culp’s honeymoon with Wall Street was ... » read more
Thursday Nov 1, 2018   
With Autumn upon us, the Northeast got off to a cold start as a Nor’Easter blew through the region last Saturday bringing the first wave of snow. Mount Snow in Vermont reached down to 30 degrees allowing the snowfall to stick around for a while. As temperatures cooled off but remained above freezing along the Coast, flooding rains invaded the region. With a significant portion of generation still on outage from maintenance season, power prices had no choice but to increase with the declining temperatures.  Figure 1 | Temperatures in Mount Snow, VT   This served as an early reminder that winter is just around the corner. To prepare for the upcoming months, generation is returning from its hibernation during maintenance season. The additional supply should put the ... » read more
Wednesday Oct 31, 2018   
It is that time of year again when the clocks will be getting rolled back and the darkness settles in around 4:00 pm.  Prior to that, we have the holiday where people like to dress up in costumes and go around the neighborhoods knocking on doors hoping to get some candy of their liking.  In year's past, I would walk around with my kids and observe how each family that opens the door participates in the festive costume holiday known as Halloween. Figure 1 | Halloween Trick or Treat In the energy industry, every day feels like Halloween as there is usually something that warrants a trick and/or a treat.  This is due to the fundamentals in the market evolving to were we are back to what is considered a basis market.  Such a market is tied to regional fundamentals with ... » read more
Tuesday Oct 30, 2018   
Throughout the fall we have noted in many of our communications how the power burns are outpacing previous year's comparisons. October is going to post a 5 BCF year on year gain in gas generation demand. A good portion of this has been the effect of hurricane destruction in Texas last year compared to this year. But outside of a weather effect this maintenance season has emphasized the big shift in the dispatch stack. New gas fired generation is making a material impact on the base load dispatch. This is causing stronger gas demand intensity.  Figure 1 | North American Power Burns  The gain in burns over the past few years has been largely a function of gas replacing coal in the intermediate portion of the dispatch stack. Rampable resources were largely ... » read more
Monday Oct 29, 2018   
If you are a Boston Red Sox fan, the 18 inning marathon on Friday night did not end as you had planned, especially after taking the lead in the top of the 13th inning only to give back the run in the bottom half.  This left the series at a 2-1 advantage with Game 4 on Saturday night.  After giving up a few runs, the Boston bats came alive and rattle off 9 runs to take a commanding 3-1 lead heading into Sunday nights match-up against David Price and Clayton Kershaw.  Yes Boston Nation, you were only one win away from another World Championship!! That dream came through with a stellar performance by Price and clutch hitting by the team with the best record in baseball this past year.  Congratulation to the Red Sox players/coaches as well as for all the Boston fans that ... » read more
Friday Oct 26, 2018   
It is that time again when the Fall Classic or better known as the World Series in Major League Baseball (MLB) takes center stage when it comes to sporting events.  I felt going into the series between the Boston Red Sox and the Los Angeles Dodgers, my preparation of what to expected and knowledge of the two teams was better than it has been in the past decade.  This is due to Mr. Belden being a diehard Red Sox fan over the years and over the last month coming into the office after a weekend series and discussing how they played.  As the confidence rose after beating the Yankees then traveling down to Houston and beating the reigning champions, the Boston nation was going into the World Series with a lot of confidence. Figure 1 | Boston Red Sox Nation On the Dodgers front ... » read more
Thursday Oct 25, 2018   
Before the prevalence of cheap Marcellus gas, the PJM market was seen as a West/East dichotomy. A large portion of generation sat in the West and constrained along two 500 kV transmission lines in Central Pennsylvania. Eventually, energy would make its way towards the major population centers along the Coast. Congestion between the West/East was represented by the spread between the two hubs. However, advancements in horizontal drilling made these gas basins not only economically viable, but among the cheapest gas reserves in the United States. As new gas generators popped up along major pipelines in the East, the previous dynamic shifted. With more generation closer to the Coast, the region was less dependent on the West. This also exposed the flaws in the West/East dichotomy ... » read more
Wednesday Oct 24, 2018   
The West has been very active the past couple of weeks with the pipeline rupture in British Columbia.  For example, the Sumas market started out the month as one of the lowest gas hubs in the the cash market to now being the highest as flows from the Spectra BC Westcoast Pipeline to Norhtwest Pipeline (NWP) dwindled down to 0 BCF after the rupture. As it currently stands, flows are down from 1.2 BCF capacity at the Huntingdon /Sumas compressor (where the two pipes exchange the gas) to flowing anywhere between .350 and .500 BCF/d. Prior to all this excitement, the talk of the market was tied to the nomogram constraint at Tracy-Los Banos that was showing up across the midday heavy load hours and pushing NP15 up over SP15 anywhere between $4.00 and $12.50 depending on the ... » read more
Tuesday Oct 23, 2018   
This week the Plains, Midwest and Northeast are seeing an early shot of winter. Temperatures are 8 degrees below normal which is causing a premature jump in space heating. This is occurring at a time when almost all of the storage caverns are scrambling to secure gas for injections. There is genuine concern at many LDC entities across the region that there is not enough gas in the ground for reliable winter supply. Due to the need for draws this week, the cash values have jumped above the winter strip at many hubs.  Figure 1 | Dominion South Cash and Winter Futures for September and October For example, the price action at Dominion South is surprising. This is the pricing hub for Utica and Marcellus production volume and despite the gains in volume, the dynamics are ... » read more
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