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In This Issue

Winter Storm Hammers Southeast to New England

Predictions of Coal’s Demise in the U.S. May be Greatly Exaggerated

Natural Gas and Oil Market Update

EIA - Weekly Natural Gas Storage Report

NYMEX Natural Gas Week-to-Week Price Change

Natural Gas Futures - Five Year Price


NOAA 6 to 10 Day Outlook
Color indicates the probability of forecasted temperatures being above or below a historical average for the period.


Winter Storm Hammers Southeast to New England

Generation Hub | February 13, 2014

Energy prices actually flatten out

At a time when a major winter storm is the top news story east of the Mississippi, spot power and natural gas prices nationally actually show a decrease, according to the latest Energy Information Administration (EIA) figures.

According to EIA figures posted Feb. 13, both spot power and spot gas prices decreased in each of its 10 reporting regions.

Spot power prices decreased anywhere from 12% to about 46%. Spot gas prices decreased anywhere from 10% to about 66%.

Perhaps it’s because prices were already so elevated. The Northwest showed the lowest spot power price at $45.25/MWh. The Southwest showed the lowest spot gas price at $5.25/mmBtu.

Power prices have already been in triple digits in much of the East.

New York City had the highest spot power price at $164.06/MWh and the second-highest spot gas price at $7.80/mmBtu. New England had the second-highest power price at $160.88/MWh and the highest spot gas price at $15.12/mmBtu.

The general media is abuzz with talk of a harsh winter storm that has walloped most of the Eastern United States, driving up energy prices and causing some blackouts along the way. News accounts said there were hundreds of thousands of people left without power nationally, many of them in the ice-covered Southern states.

The Carolinas and Georgia have gotten hit by unusually large amounts of snow and ice.

The National Weather Service (NWS) said a strengthening area of low pressure will move up the East Coast on Thursday bringing with it significant winter weather from the Southeast to New England. Ice Storm Warnings and/or Winter Storm Warnings are currently in effect for several states. In these areas, road conditions will be dangerous.


Predictions of Coal’s Demise in the U.S. May be Greatly Exaggerated

Fuel Fix | February 13, 2014

Natural gas prices at a four-year high have utilities shifting to coal to generate 4.519 million megawatt-hours a day, the most since 2011, government data show. Within three years, coal’s share of power production could climb to 40.3 percent from about 39 percent last year, while gas’s share will probably drop to 27 percent from 27.5, the U.S. Energy Information Administration said.

An arctic blast has helped put the U.S. on pace for the coldest winter in more than 30 years through January, prompting utilities to burn more of the less expensive coal. The U.S. is poised to emit the most carbon dioxide in three years, undermining President Barack Obama’s efforts to reduce pollution and steer utilities away from the fossil fuel.

“The idea of coal disappearing is not an effective climate change policy,” said John Thompson, an analyst at the Boston-based Clean Air Task Force. “Coal use is growing.”

International interest: China’s largest coal company to learn shale in US deal

Thompson said implementing technology that allows utilities to capture carbon is better than trying to eliminate coal because other countries are increasing use of the fuel.

Coal on the New York Mercantile Exchange has risen 13 percent to $57.40 a ton as of Feb. 12, from its 12-month low of $50.84 on Sept. 4. Gas has surged 49 percent to $4.822 per million British thermal units. Prices reached $5.557 on Jan. 29, the highest since January 2010.

Cold December

Temperatures during the U.S. heating season, which runs from November to March, have been below the 20th century average, with December coming in the coldest since 2009, according to the National Climatic Data Center in Asheville, North Carolina.

U.S. electricity output in the week ended Feb. 8 was 11 percent higher than the same week a year earlier, data from the Edison Electric Institute, a Washington-based group that represents power companies, show.

That’s helped to push gas prices up almost 50 percent from a year ago while coal prices have slipped 1.9 percent during the same period. An average U.S. natural gas plant can make a profit of $3.04 a megawatt-hour, based on March prices, compared with a profit of $31.58 for the typical coal-fired generator, data compiled by Bloomberg show.

Production boost: Temporary rebound expected for coal mining in 2014

The counter argument for coal’s rebound is that a return of mild winters combined with record gas production could knock back gas prices, making coal less competitive to burn, said Lucas Pipes, an analyst at Brean Capital LLC in New York.

Coal’s command

Coal commanded 50 percent of total U.S. electricity. generation as recently as 2005. It sank to a record low of 37 percent in 2012 as gas prices tumbled to a 10-year low of $1.902 in April of that year.

Hydraulic fracturing, or fracking, unlocked shale deposits that previously were uneconomical to produce and helped cause a glut of gas. Mild winters in 2012 and 2013, also contributed to lower utility reliance on coal, according to Hans Daniels, executive vice president at Doyle Trading Consultants LLC, a Grand Junction, Colorado-based coal analysis company.

The utility industry’s turn away from coal swelled stockpiles above 200 million tons in 2012 for just the second time in the last 20 years, Energy Information Administration data show. Coal stocks have fallen 14 percent through October, the most recent month for which data is available, according to the government.

Carbon emissions

As utilities eat through the excess supply, they set the U.S. on a course to boost carbon dioxide emissions by 0.7 percent to the highest since 2011, the EIA said in its Jan. 7 Short-Term Energy Outlook.

Burning coal emits 205.7 pounds of carbon dioxide per million British thermal units compared with 117 pounds per million Btu for natural gas.

Coal’s cost: German power costs to fall further as coal expands

Obama’s Mercury and Air Toxics Standards, or MATS, will be implemented next year, forcing older plants to install technology to reduce the pollutants or retire. In his Jan. 28State of the Union Address Obama signaled that he’s prepared to act without Congress to advance parts of his agenda and said the country has to “act with more urgency” to fight climate change.

Electricity generation contributed about 39 percent of the U.S.’s carbon dioxide emissions in 2012, government data show. Still, the country’s efforts to reduce pollution may be muted if other nation’s increase coal use, said Wyatt King, resident expert on climate and environmental issues at Washington-based Albright Stonebridge Group.

Dethroning oil

Coal is the fastest growing energy source in the world, rising 2.3 percent a year through 2018, and poised to dethrone crude oil as the largest source by 2020, the International Energy Agency said in its December Medium-Term Coal Market Report.

Coal slow: Jobs in oil and gas buck national employment trend

That’s being driven mostly by China, “where coal is powering an industrial revolution,” Laszlo Varro, head of the agency’s gas, coal and power markets, said in a Jan. 29 presentation at the Center for Strategic and International Studies in Washington. The fuel is also experiencing a resurgence in Europe as the continent’s economic woes increase its appetite for cheap electricity, he said.

“We get a sense that coal is backing natural gas out of the stack,” said Brison Bickerton, head of strategy at Freepoint Commodities LLC in Stamford, Connecticut. “Coal burn should remain on for some time. Prices are incentivizing unused coal capacity to come on and back out natural gas demand.”

Natural Gas and Oil Market Update

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Natural Gas Futures Climb Further After EIA Data

MarketWatch | February 13, 2014

Natural-gas futures on Thursday climbed further after the U.S. Energy Information Administration reported that supplies of natural gas dropped 237 billion cubic feet for the week ended Feb. 7. The drop was a bit higher than market expectations as analysts surveyed by Platts forecast a decline of between 228 billion cubic feet and 232 billion cubic feet. Total stocks now stand at 1.686 trillion cubic feet, down 863 billion cubic feet from a year ago and 631 billion cubic feet below the five-year average, the government said. March natural gas was at $5.03 per million British thermal units, up 21 cents, or 4.2%. It was trading at $4.96 before the data.


arrow upWTI Oil Falls From Four-Month High as U.S. Retail Sales Weaken

Bloomberg | February 13, 2014

West Texas Intermediate crude fell from the highest closing level since October after reports that U.S. retail sales declined in January and jobless claims rose last week, bolstering concern that fuel demand will weaken.

Futures fell as much as 1 percent. Retail sales fell by the most in 10 months, Commerce Department figures showed today in Washington. More Americans than forecast filed applications for unemployment benefits last week, Labor Department data showed. Prices rose yesterday after crude stockpiles tumbled at Cushing, Oklahoma, the delivery point for WTI futures.

WTI for March delivery declined 33 cents, or 0.3 percent, to $100.04 a barrel at 9:42 a.m. on the New York Mercantile Exchange. The contract climbed 0.4 percent to $100.37 yesterday, the highest settlement since Oct. 18. Trading volume was 7.2 percent above the 100-day average.

Brent for March settlement, which expires today, slipped 27 cents to $108.52 a barrel on London-based ICE Futures Europe. The more-active April contract dropped 16 cents to $108.19. Trading was 4.2 percent below the 100-day average.

EIA - Weekly Natural Gas Storage Report

EIA - Weekly Natural Gas Storage Report


Working gas in storage was 1,686 Bcf as of Friday, February 7, 2014, according to EIA estimates. This represents a net decline of 237 Bcf from the previous week. Stocks were 863 Bcf less than last year at this time and 631 Bcf below the 5-year average of 2,317 Bcf. In the East Region, stocks were 315 Bcf below the 5-year average following net withdrawals of 106 Bcf. Stocks in the Producing Region were 232 Bcf below the 5-year average of 845 Bcf after a net withdrawal of 89 Bcf. Stocks in the West Region were 84 Bcf below the 5-year average after a net drawdown of 42 Bcf. At 1,686 Bcf, total working gas is below the 5-year historical range.

NYMEX Natural Gas Week-to-Week Price Change NYMEX Natural Gas Week-to-Week Price Change

Natural Gas Futures - Five Year Price

NYMEX Natural Gas Week-to-Week Price Change - Five Yearly Snapshot
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