North American Snowpack Fuels Energy Speculation

The market continues to be puzzled over mixed weather signals. Following last week's impressive gains, the market has pulled back this week as bearish risks are showing up in one of the major weather models for late November, calling for lighter than normal national demand. Right now, this is a short term driven market. Volatility will persist until there is greater clarity on expected demand and sustained weather patterns. (Spark Energy)

As we head into what looks to be an active period in North American weather, some noteworthy conditions need to be discussed. One is snow cover in North America, which is now deeper and more extensive than in recent years.The snowpack has not been this prominent for mid-November since 2003. Widespread snow and ice a ​dvancing into lower latitudes acts as a refrigerant, and would favor colder solutions in the U.S. (WeatherAmerica)

After rallying sharply last week, the Dec ’17 natural gas contract has been drifting lower this week on warming weather forecasts. The prompt month finished trading on Wednesday at $3.080/MMBtu, down nearly 13 cents from Friday’s close. The market has been focused on weather forecasts to dictate near-term price movement, as longer-term fundamentals are being shaped by growing production and increased exports. (Direct Energy)

Production has been setting records almost daily as pipeline expansions have allowed more gas to flow. LNG exports seem poised to grow, with the Cove Point LNG export facility on pace to ship an additional 0.7 Bcf/d out of the U.S., increasing LNG exports to nearly 4.0 Bcf/d. (Direct Energy)

EIA weekly natural gas storage report released this morning represents a net decrease of 18 Bcf from the previous week. This now puts the storage levels 6.7% below last years and 2.6% below the 5 year average. This is the first withdrawal of the season and when compared to last year’s 34 bcf injection and the five-year average injection of 12bcf, today’s 18 bcf decrease is a bullish market signal. (EIA)

New York Zone J and NEEPOOL prices remain high. PJM West has also moved higher as pipeline expansion starts to take natural gas out of the region. (Direct Energy)

More than 5,000 MW of power generation is slated to retire in Texas, moving prices in the area higher. In California, the hot summer combined with high hydropower levels and transmission issues have put a risk premium back into power prices. (Direct Energy)

8-14 day Forecast
6-10 day Forecast

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