Energy Prospectus

Natural gas prices are on fire this month — here's why

•Natural gas prices are surging 12 percent this year to the highest levels since January.
•Low U.S. gas stockpiles, higher-than-usual power demand during a warm autumn and nuclear power plant outages are driving the rally, says Barclays.
•The bank expects a volatile winter for natural gas prices, with supply and demand balanced on a "knife's edge."

Barclays expects prices to ease, but the bank warns that heading into the winter with so little gas in storage leaves the market susceptible to price spikes. The bank's weather outlook calls for natural gas prices to average $2.99 per mmBtu this winter, but if temperatures are 10 percent colder than anticipated, that estimate shoots up to $3.65 per mmBtu.

Read: https://www.cnbc.com/2018/10/04/natural ... s-why.html

New EIA report on natural gas

According to EIA’s Natural Gas Monthly, natural gas consumption and exports averaged 93.4 billion cubic feet per day (Bcf/d) during the first half of 2018, or 12% greater than during the first half of 2017. Total supply of U.S. natural gas, including domestic production, imports, and storage withdrawals, averaged 93.3 Bcf/d during the first half of 2018, a 12% increase from the first half of 2017. < I find it "curious" that EIA includes draws from storage in total supply.

Demand for U.S. natural gas is growing much faster (~12% YOY) than global demand for oil (~1.6% YOY)

Domestic natural gas consumption in the first half of 2018 increased in all sectors compared with year-ago levels.
> The largest growth occurred in the residential and commercial sectors, which increased by 3.8 Bcf/d (16%) combined, compared to the first half of 2017.
> Residential and commercial consumption is primarily related to heating needs, and the beginning of 2018 experienced record, prolonged cold temperatures across many of the Lower 48 states. Population-weighted heating degree days, a temperature-based proxy for heating demand, were 17% higher in the United States during the first half of 2018 than in the first half of 2017.
> In the U.S. electric power sector, power plants used 3.6 Bcf/d (16%) more natural gas during the first half of 2018 compared with the same time last year. Electricity demand tends to increase as hot weather increases demand for air conditioning or as cold weather increases demand for electric space heating.
> Natural gas consumption in the power sector has also increased with the increased build out of natural gas-fired power plants in much of the country.
> Industrial consumption of natural gas in the United States (including lease and plant fuel) was 1.6 Bcf/d (6%) higher in the first half of 2018 compared to the first half of 2017.
> Industrial consumption of natural gas is affected by weather-related space heating needs, particularly in the Northeast and Midwest.
> In addition, industrial consumption is a function of industry-specific demand (feedstock) and market factors.
> Demand for natural gas in the petrochemical industry is way up YOY