The Energy Information Administration (EIA) said in its recently issued Winter Fuels Outlook (WFO) that it expects U.S. propane demand for the 2023-24 heating season to be slightly below the 5- and 10-year averages. The RBN and EIA weather models use heating degree days (HDDs) as a measure of how cold temperatures are compared to a base temperature — more HDDs mean colder temperatures. As the chart below shows, the EIA model shows total U.S. population-weighted HDDs for this winter to be on par with last winter but 4% less than the 5-year average and 3% below the 10-year average. It expects HDDs to fall by 18% in the West but climb by 11% in the South, 7% in the Northeast and 3% in the Midwest.
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Ordinary Average Guy - EIA's Latest Approach to Weather Modeling Promises Forecast Improvements
The Energy Information Administration (EIA) recently changed the weather forecast methodology for one of its most important energy models — the Short-Term Energy Outlook (STEO) — and while we talk about the effects of weather on energy markets fairly often (571 times in the past 12 years, or about once a week, but who’s counting?), we rarely take a step back and explain how those weather forecasts are used. In today’s RBN blog, we look at different approaches to weather forecasting, the recent change made by the EIA, and how the new approach might affect our understanding of EIA forecasts.
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Under the Weather – Cooling Degree Days, Natural Gas Storage and Price
With natural gas storage at record levels in early June, it looks like it’s going to be a long summer for gas producers hoping for better prices. The most important factor will be hot weather, or lack thereof. Temperatures this summer will have a significant impact on how much of that gas in storage is put to use for electric power generation. In today’s blog we’ll work through the degree day numbers and explain how a milder than usual summer could impact storage levels.
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Natural Gas Withdrawal Symptoms – Price Recovery and the Winter Season
Front month NYMEX natural gas prices reached a twelve-month high of $3.76/MMBtu this past Wednesday - falling back to $3.70/MMBtu yesterday. NYMEX prices have been on a rising trend ever since they dipped under $2/MMBtu back in April of this year but can they sustain that momentum? The most important factor in answering that question over the next 4 months will be the weather. More specifically, will there be a winter this year and how much gas is withdrawn from storage as a result of the cold weather. Yesterday the EIA announced the first natural gas storage withdrawal of this winter. Today we examine the start of the storage withdrawal season.
