As reported in Wall Street Journal

Tim Puko

A repeat of last year’s snowy, Arctic-cold winter is looking a little more likely today. Natural gas traders, still scarred by the memory, are bunkering in.

Buyers have been rushing into the gas market for a week on fears of a sequel to last winter’s Polar Vortex, which walloped the eastern half of the U.S. with brutally cold temperatures from the deep south up to New England. Many spent months dismissing that possibility as simple panic, but now meteorologists are getting more pessimistic.

Both Commodity Weather Group and WeatherBELL Analytics LLC released long-term forecasts this week showing a notably higher risk for a cold December. That was supposed to be relatively mild month this winter, balancing out a cold January and February. Now the whole winter is shaping up to be “pretty nasty,” WeatherBELL said.

That has propelled natural gas to a six-session rally. It’s rebounded nearly 18% since it hit its 2014 low last week. Gains of nearly 3% Tuesday are pushing it near a three-month high.

And traders are all wondering if the winter of 2015 will bring a repeat of 2014.

“I think it’s a reasonable risk,” said Matt Rogers president and meteorologist at Commodity Weather Group in Bethesda, Md. An early season burst of cold starting next week is already “really spooking a lot of people.”

More than half of all U.S. homes use natural gas as their heating fuel, making the natural gas market especially vulnerable to weather. Tepid demand had capped the market for four months and had bankers and investors fearing a glut by the spring. The new forecasts have flipped that script, at least temporarily.

Timothy J. Collins, director at Fairfield Advisors LLC in Madison, N.J., has had to get out of spread bets that depended on falling prices in January, he said. He is now trying to buy into positions that would benefit from rising prices that month, but he still thinks that record production will help balance out the fear of a Polar Vortex repeat, he said.

“I think people are overly sensitive to it,” said Mr. Collins, whose fund manages $35 million. “You know how they say the military is always trying to fight the last war? Well, we keep trading the last position.”

The rally could produce bargains for stock investors, said Jonathan Waghorn, co-portfolio manager at Guinness Atkinson Asset Management Inc. in London. Its $84-million fund holds Chesapeake Energy Corp., QEP Resources Inc. and Ultra Petroleum Corp, among other oil and gas producers that could benefit from rising gas prices balancing out free-falling oil prices.

“Gas is strong, yet the energy equities names are all getting hit,” Mr. Waghorn said. “If you believe the gas story, today’s giving you a good opportunity to pick up some energy names getting smashed by weak oil.”

As reported in US Energy Administation  

Electric Monthly Update   3/21/14

Net generation in the United States increased 8.2 percent in January 2014 compared to the previous year. This year-over-year increase in electricity generation occurred because most states in the eastern half of the U.S. experienced significantly below normal temperatures in January 2014. This led to a significant increase in heating load compared to last year which caused increased demand for electricity generation during January 2014. The only region that experienced a decrease in electricity generation in January 2014 was the West, where the overall average temperature for many Western states was significantly above average for January. This caused the West to have a 4.4 percent decrease in electricity generation compared to last January.

For the second consecutive month, electricity generation from coal increased in all regions of the country except for the West. The change in natural gas generation was much more varied, with the Mid-Atlantic, Southeast, Florida, Central, and the West all experiencing increases in natural gas generation. The Northeast and Texas all experienced decreases in natural gas generation compared to last January. The Northeast had the largest percent change in natural gas generation, decreasing 17.2 percent compared to last January. The large decrease in natural gas generation in the Northeast can be attributed to the significantly colder temperatures experienced in January 2014, which led to a large increase in natural gas prices in the region that, on some days, effectively priced natural gas generation out of the market.

Electricity generation from nuclear plants increased in almost all parts of the country, except for in the Mid-Atlantic and Southeast where nuclear generation was down slightly from the previous year. Other fossil generators increased electricity generation in all regions of the country during January 2014, particularly in New England, the Mid-Atlantic and the Southeast. At times, it was cheaper to burn oil than natural gas.

Short-Term Energy Outlook

March 11, 2014 Release

 As reported by US Energy Information Administration



  • Temperatures east of the Rocky Mountains have been significantly colder this winter (October – February) compared with the same period both last winter and the average for the past 10 years, straining distribution networks and putting upward pressure on consumption and prices of fuels used for space heating.  U.S. average heating degree days were 13% higher than last winter (indicating colder weather) and 10% above the October  through February 10-year average.  The Northeast was 13% colder than last winter, the Midwest and South both 19% colder, while the West was 5% warmer.


  • The cold weather this winter had the greatest effect on propane prices, particularly for consumers in the Midwest.  Cold temperatures have tightened supplies that were already low heading into the winter heating season.  Residential propane prices in the Midwest rose from an average of $2.08 per gallon (gal) on December 2, 2013, to $4.20/gal on January 27; prices have since fallen back to $2.78/gal as of March 3.  EIA now expects that propane prices in the Midwest will average $2.62/gal over the winter (51% higher than last winter) while those in the Northeast will average $3.47/gal (15% higher than last winter).


  • Cold temperatures have continued to tighten heating oil supplies and helped drive up retail prices.  Since the beginning of the year, distillate inventories in the Northeast (Petroleum Administration for Defense Districts 1A and 1B) have fallen by almost 6.9 million barrels to reach 18.3 million barrels on February 28, 6.4 million barrels below inventory levels for the same week in 2013.  Weekly U.S. residential heating oil prices increased by $0.20/gal during January and have averaged near $4.24/gal since the beginning of February.  Despite the recent increases, EIA expects that U.S. heating oil prices will average $3.83/gal this winter, $0.04/gal (1%) lower than during last year’s winter heating season, mainly because of lower crude oil prices.


  • The North Sea Brent crude oil spot price in February averaged near $110 per barrel (bbl) for the eighth consecutive month, while West Texas Intermediate (WTI) crude oil prices increased by $6/bbl from the previous month to reach $101/bbl.  Continued high refinery runs helped reduce inventories at the Cushing, Oklahoma, storage hub to 32 million barrels, the lowest level since February 2012, and helped strengthen WTI prices.  The discount of WTI crude oil to Brent crude oil, which averaged more than $13/bbl from November through January, fell to $8/bbl in February.  EIA expects the WTI discount to average $10/bbl in 2014 and $11/bbl in 2015.


  • Cold weather also contributed tocontinuing large withdrawals of natural gas from storage and a surge in natural gas spot prices, which hit record levels in several markets during periods of extreme cold.  Natural gas working inventories on February 28 totaled1.20 trillion cubic feet (Tcf), 0.91Tcf(43%) below the level at the same time a year ago and 0.76Tcf(39%) below the five-year average (2009-13).  Henry Hub natural gas spot prices were volatile over the past two months, increasing from $3.95 per million British thermal units (MMBtu) on January 10 to a high of $8.15/MMBtu on February 10, before falling back to $4.61/MMBtu on February 27, and then bouncing back up to $7.98/MMBtu on March 4.  EIA expects that the Henry Hub natural gas spot price, which averaged $3.73/MMBtu in 2013, will average $4.44/MMBtu in 2014, an increase of $0.28/MMBtu from the 2014 projection in last month’s STEO.  Residential natural gas prices are expected to average $10.05 per thousand cubic feet (Mcf) this winter, an increase of $0.30/Mcf (3%) from last winter.


January 29, 2014

The polar vortex punch


Keeps punching



This week we saw


Temperatures plunge….


Once again



It may have been nice….


The first time around




But by now…



People seem to be getting


A little groggy



It’s time to change the channel




As I stated last week


The energy market did react


To the plunging temperatures



Basis (transportation cost) went up 1000% in 1 day



Over the past year



Basis pricing


Has been at a 10 year low



The jump in pricing


Had many experts just shaking their heads



They were finding themselves in…



Unchartered waters



This was beyond whiplash




We do not see these prices sustaining



If you look at natural gas futures


A couple months out


Prices tend to be


More reasonable




You just do not want to


Be shopping your account


And include the present month energy pricing


In the mix



For it will skew the whole proposal


And you will end up paying a premium




They say…


Patience is a virtue



In this business


You need it

Polar Vortex

January 29, 2014

Let’s take a look


At our extended weather forecast…






Tomorrow is going to be cold




The next day…


Should be just as cold



Possibly colder






The day after that…



Will probably be just as cold




However, we also show that


There could be a chance of….



Freezing rain…



It might be snow…






Possibly a Wintery Mix




This can all bring icy conditions





Let’s be careful out there






Let’s take a minute to look at



What may be causing



This weather pattern






We would be looking to the



Western Pacific




However it seems that La Nina



Is taking the winter off







We have been visited by



A polar vortex


Pushing down from the Artic




In the first two weeks of 2014



Much of the United States weathered


A cold snap of unprecedented proportions…




A weather phenomenon known as…


The “Polar Vortex”



Shattering temperature records across the country




Just when you thought it was safe


To go outside…




Another polar vortex is on the way



This one is due to hit



This week





Is this a new phenomenon?




I thought it was just cold outside




Because it is…






The energy markets


Have been in a reaction mode




Put a name on the weather conditions



And they are all in




Prices jump




You wait a day…



They jump again




You wait a few more days



Prices start to ease back down





Prices never come down…



As fast as they go up




With another polar vortex



On the way




You can almost hear



The energy market’s teeth clattering




While all this is happening




We find it best


To look past


The frenzy



One thing I have learned



Being in the energy business…


For 13 years




Patience is a virtue




Our goal has always been




To educate our clients






Provide the best opportunity



For savings





With a lower basis (transportation) cost



And increasing natural gas supplies




Most experts feel



Natural gas prices will settle down




Once again bringing



Great opportunities for savings



In both



The Natural Gas and Electric markets




We just have to wait for the Polar Vortex



To pass

As reported in Christian Science Monitor

By             , Staff writer / January 8, 2014

The polar vortex gripping the nation is as unpleasant for utilities and grid operators as it is for you. What does the polar vortex mean for your next utility bill?

What happens when much of the nation simultaneously reaches for the thermostat and turns up the heat? Energy prices rise.

With Americans shivering through a “polar vortex,” utilities and grid operators are scrambling to meet demand amid record low temperatures. A stressed power grid and constrained natural gas pipelines are already pushing up the price of electricity and natural gas on wholesale markets.

The good news is that consumers are relatively insulated from the polar vortex’s temporary price shocks (besides the obvious cost increase of turning the heat up for a prolonged period). The bad news is that if this is the first polar vortex of many to come, that prolonged grid strain and need for new infrastructure will almost certainly make its way into the bottom line of your monthly utility bill.

“Most retail customers are set up through regulated natural gas rates for this reason – so that short-term spikes in the spot price don’t automatically flow through,” says M. Tyson Brown, statistician at the US Energy Information Administration (EIA). “To the extent that this is a long-term trend – that really affects the price people pay.” Read the rest of this entry »