The EnergyWire Market Update

Though near term weather forecasts have been trending cooler, current models indicate less Heating Degree Days for the Oct/Nov period than the 30-year normal, providing little momentum to push prices above resistance at $3.00. LNG exports have been steady at ~3.0 Bcf/d over the last week, with the fourth train at Sabine Pass now online. (Direct Energy)

Calendar 2018 prices remain elevated near $3.06, and the further out calendar strips have found support above $2.85. (Direct Energy)

The market is behaving as if it’s still not convinced that a sustained period of cold weather will be engulfing the country anytime soon. So far, in the early part of the so-called official winter heating season, October will be significantly warmer-than-normal with a projected cooling down ready to move into a major part of the country, but it is not expected to last for any length of time. The NOAA is now projecting an easing of below normal temps. The short-term weather patterns have been short-lived for well over a year. Trading will continue to be choppy, with contradicting weather forecasts, and little conviction until more of a sustained weather trend remains in play. (Spark Energy)

The weekly Natural Gas storage report implied a build of 64/bcf bringing the year-to-date total to 3,889/bcf. Storage levels currently stand at a 4.8% deficit vs last year and -1.2% to the 5 year average. (EIA)

As expiration approaches with little certainty surrounding the winter forecasts, the prompt month natural gas contract seems unlikely to expire above $3.00/mMmbtu. Both the 6-10 and 8-14 NOAA forecasts are now pointing toward normal to above normal weather, despite earlier forecasts calling for a longer cold-shot to close out the month. Long-term winter forecasts continue to be mixed, adding further speculation to energy markets as we enter the cold season.

Power and Gas forward strips have remained relatively flat after mild volatility entered the market amidst a mid-october cold snap and ever-changing short-term weather forecasts. Since the most recent forecasts reflect more normal weather, the 12month natural gas forward strip remains range-bound surrounding the three dollar level with all power markets holding steady.

Today, US GDP data for the 3rd quarter came in at +3.0%--above the estimates we saw of +2,5/+2,7 (DJI/Bloomberg).

The Euro is higher today as the ECB is expected to announce a rollback of their bond buying program starting next year - they are seen reducing their bond purchases by 20-30 bln Euros from current 60 bln level (Bloomberg).

6-10 day foecast

8-14 forecast

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