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Tuesday Jan 26, 2016   
There had been talks of production drop this year due to producers’ hedges rolling off. While that is a plausible theory, recent pipeline nominations have not show the effect of hedges rolling off, at least, not yet. Production level has been strong in Lower Marcellus (Figure 1), which includes southwest Pennsylvania, Ohio, and West Virginia.  As you can see, the Lower Marcellus showed a year-on-year increase of +2.9bcf/d, a month-on-month increase of +0.3 bcf/d for January.   Figure 1 | Lower Marcellus Production 7 Day Average ... » read more
Monday Jan 25, 2016   
With January almost in the books, I thought it would be good to take a quick look at how the California water situation is shaping up for this upcoming Spring/Summer.  First, the El Nino year that was to be expected is bring plenty of rain to the state, it just happens to be hitting in the Northern part of the state so far, which is good since that is where most of the hydro facilities sit anyway. Figure 1 | Northern California Snow Water Equivalent - North  As you can see in Figure 1, the red line is showing a pretty good slope over the past two weeks as ... » read more
Friday Jan 22, 2016   
EnergyGPS staff recently put together a training session for a client. The client wanted an overview of US power and natural gas markets for people in the renewable energy business with little exposure to the wholesale markets. To make things a little bit more fun and interesting, we started our discussion of each RTO with a high level overview of that RTO and a popular culture reference to personify that market. In the spirit of having a little bit of fun on a Friday, we are presenting that portion of the training in today’s newsletter. We will work our way ... » read more
Thursday Jan 21, 2016   
The main headline this winter has been dominated by the bearish natural gas markets as weak demand coupled with stout supply has kept prices low.  More recently, the focus has shifted to the drastic decline in oil prices. Both the decline in NG and oil are bearish indicators for the power markets as weak NG price keep price down and cheap oil provides an inexpensive substitute if NG prices do spike. This week NEISO provided a perfect example of the bearish impact these two factors are having on power prices YoY.  The high temperature for Boston ... » read more
Wednesday Jan 20, 2016   
We are now half way through the withdrawal season. Storage inventory is higher than ever. The year-on-year surplus is at 587 bcf (See Figure 1 for a comparison). With such high inventory level, we wonder if certain clauses in the storage contract may force some shippers to withdraw gas. If so, how would it affect the cash prices? Figure 1 | Storage Inventory Year-on-Year Comparison Last week we talked about how ANR applies a .85% cycling reduction on any balance in excess of 20% of one’s maximum storage quantity. Many other pipelines have similar sections in ... » read more
Tuesday Jan 19, 2016   
Bye Buy Brent-WTI Spread Last week one of the most persistent energy price relationships in the global energy markets flip-flopped. For the last five years Brent crude oil has traded at a premium to West Texas Intermediate (WTI) as evidenced by the figure below which shows the Brent WTI spread (Brent less WTI). Earlier this week WTI traded $1.28 per barrel above Brent. Figure 1 | Brent-WTI Spread for Last Five Years (dollars per barrel) So what has caused the Brent WTI spread to collapse and, at least temporarily, reverse? While some analysts suggest the lifting of ... » read more
Friday Jan 15, 2016   
A necessary element in understanding power and gas prices is an understanding of the relationship between coal and natural gas power burns. The equation becomes complicated during winter months as fluctuating natural gas prices can push gas fired generation out of the money, displaced by relatively cheaper coal generation. If we look at the EnergyGPS Coal Burns report we can see the grid changing as we move through winter.  Figure 1| Regional Coal Burns BCF Equivalent - Daily  By converting the total MW coal burns into a BCF equivalent we are able ... » read more
Thursday Jan 14, 2016   
As oil is currently sitting around  $30 a barrel for the first time in 12 years, the decline is particularly relevant to the Northeastern power markets as we typically see oil generation begin to replace natural gas this time of year.  During the winter months it is not uncommon for traditionally gas burning generators to switch to oil as cold temperatures drive up the price of natural gas. Considering the overall bearish conditions in the gas market thus far this winter, it seamed that any oil generation, especially gas to oil switching, would not ... » read more
Wednesday Jan 13, 2016   
As we work our way through the 2016 Winter, there are a three things that are keeping the natural gas market from making a big rebound.  The first item on the list is the weather.  In December, we saw spring-like conditions in the Eastern portion of the country (Philadelphia was topping the 80 degree mark on certain days).  The Midwest was not too far behind with highs in the upper 60’s/low 70’s while Texas was seeing massive wind days netting back the overall power loads.  As a result, the overall res/com demand numbers were coming in ... » read more
Tuesday Jan 12, 2016   
Coming into this winter there was a lot of speculation about the El Nino weather pattern and its possible effects on the on going drought in California.  The primary expectation was the El Nino weather pattern would drive increased precipitation possibly ending the two year drought for the golden state.  Thus far the precipitation in California is up significantly YoY and we are seeing the results in the hydro power production. Figure 1| California Hydro Generation HL YoY - MW/h  Total hydro production is up around 300 MWs from last year and ... » read more
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