CDD

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.

CME/NYMEX Henry Hub natural gas futures prices for August delivery continue to trail $1.50/MMBtu behind year-ago levels and natural gas production volumes show little sign of softening. Gas demand is rallying to record-setting levels and the balance is tightening. But there is still a long way to go before the storage inventory surplus is reined in. Today we revisit supply/demand balance and its impact on storage this summer.

Today the Energy Information Administration (EIA) publishes weekly US natural gas storage numbers for the week ending July 6, 2012. Last week EIA reported 39 Bcf injections making the total storage 3,102 Bcf. The natural gas stockpile is now 602 Bcf higher than this time last year but the rate of storage injection has slowed as a result of increased demand for natural gas burn by power generators. In today’s blog we look at the supply demand picture to see what is driving higher natural gas burn by power generators and the implications for storage.

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.