April 27, 2009

Natural Gas Declines to 2003 Levels
Natural gas is still looking for a bottom. This morning, Monday April 27, natural gas declined to $3.21 per mmbtu at 10:45. It settled on Friday at $3.297 per mmbtu. It is the perfect storm for low gas prices. Storage is excellent. Weather is balmy. And industrial demand, as everyone is painfully aware, is flaccid, weak, moribund... fill in your own modifier.

In a Bloomberg.com article this morning, Reg Curran summed it up perfectly: "Gas futures have plunged 43% since the end of December after the U.S. economy contracted 6.3 percent in the fourth quarter." Ouch. That's a major slowdown. Energy analysts do not see any recover in natural gas prices this year.

We have covered in depth the decline in exploration. There is also a decline in the construction of supertankers. The decline in shipping rates and the mandatory use of multi-hull crafts will reduce the crude fleet by 20%. When the world economy rises again, demand will be high for tankers once again.

In the exploration area, activity is slack. According to Baker Hughes Inc. drilling projects are still declining. The total number of active natural gas rigs are 742. That's 18 less than the previous week and 731 rigs less than the previous year.

Natural Gas Storage
Working gas in storage was 1,741 Bcf as of Friday, April 17, 2009, according to EIA estimates. This represents a net increase of 46 Bcf from the previous week. Stocks were 459 Bcf higher than last year at this time and 322 Bcf above the 5-year average of 1,419 Bcf.

Natural Gas Market Watch- Intraday Prices Snapshot
Here are the intraday prices on the NYMEX electronic market today (Monday) at about 11:30 AM for the next five months($ per mmbtu, intraday prices):

May. $3.210 -0.087
Jun. $3.319 -0.083
Jul. $3.463 -0.087
Aug. $3.585 -0.098
Sep. $3.690 -0.770

Natural Gas Futures:
PMC 30-Day, 90-Day, 12-month Natural Gas Futures Chart

Crude Oil Watch
West Texas Cushing traded down $2.27 to $48.53 per bbl last Friday.
NYMEX Crude front month future is down $1.88 per bbl this morning to $49.67 at 11:08 AM.
 OPEC Basket Data

Electricity Watch
The Northeastern day ahead pricing is stable With the exception of PJM, which seems to be reflecting some congestion pricing issues.

Efficiency- Our Fifth Fuel
(We will be adding a brief section to our newsletters that highlights developments in energy efficiency. Efficiency is the Holy Grail in the pursuit of global energy sustainability. Some have gone as far as call energy efficiency, our Fifth Fuel.)

Follow the Energy Efficiency Money
The current stimulus package is kickstarting energy efficiency program with significant funding. $3.2 billion is provided to the Energy Efficiency and Conservation Block Grant (EECBG), which has not been funded in the past. $400 million of the $3.2 billion will be distributed through a copetitive program among state, local and tribal entities. Who gets the rest? Amazingly, our 1700 largest cities will receive 68% of the $2.8 billion; 16% will be passed through to counties and towns with small populations; 12% to State Energy Programs and only 2% to competitive program.

Power Management has helped companies access state energy-efficiency programs and we certainly plan to expand our efforts in the future as funding increases. If your company is seeking to find new ways to reduce energy costs, give us a call at 585-249-1360; or in New England at 508-830-3876.
 
Weather Trends
According to the National Weather Service, most of the midwest and eastern US will be cooler than average next week, which will phase into seasonally average temperatures.
NOAA Forecast for Next Week
8-14 Day forecast
NOAA Forecast- 30-Days

Written and Researched by Martin Linskey; Energy Charts developed by Charles Myers.

Disclaimer: This information is provided for the use of our customers and potential customers. Power Management Company assumes no responsibility or liability for the accuracy or completeness of pricing or information in this document. Historical data was obtained from sources that we believe to be reliable, but we do not guarantee its accuracy or completeness. It is not intended to provide advice or recommendation. Views are subject to change without notice.