Factor - Supply
Commentary
According to the Energy Information
Administration (EIA), natural gas production increased for three
consecutive months from January to March 2010. The natural gas
rig count and horizontal rig count have increased by 4 percent
and 12 percent, respectively, from the March average – a good
indication that the industry can expect production to continue
to grow in the upcoming months. Also, a substantial increase in
well permits in Alberta and a surplus in Canadian storage
inventory levels suggest Canadian gas imports in 2010 will be
higher than the previous year.
Factor - Demand
Commentary
With Industrial Production indices and positive housing
statistics pointing to an economic rebound, industrial gas
demand is steadily rising back to 2008 levels. Meanwhile, above
normal temperatures and competitive coal-to-gas pricing are
driving gas-fired electric generation demand.
Factor - Weather
Commentary
The cooling degree days in May were 14 percent above normal,
with much of the warmer than normal temperatures concentrated in
the eastern half of the country. The outlook for the early
summer months is intense heat over the southern portions of the
country and along the eastern seaboard. The consensus
among weather forecasters is to anticipate a much more active
hurricane season than in 2009.
Factor - Storage
Commentary
Robust natural gas storage injections have kept the national
inventory level above the 5-year average, but all the injections
reported in May have been at or below prior-year levels. The
storage numbers are expected to continue coming in below last
year’s levels to slowly eat away at the 71 billion cubic feet
year-over-year surplus over the course of the next two months.
Factor - Economy
Commentary
During May, the Dow Jones Industrial Average responded to
the worsening financial crisis in Europe by posting the steepest
percentage drop since 1940. The vulnerability posed by the Greek
debt crisis seems to be more than offset by the near-term
constructive signs from key economic indicators, however.
Factor - Summary
Commentary
Despite major production increases, the economic rebound
seems to be contributing to greater demand for fossil fuels,
particularly from the industrial sector. Meanwhile, weather
forecasts for the summer months indicate warmer than normal
temperatures for much of the nation – thus driving greater
electric generation.
Factor - Supply
Commentary
According to the Energy Information
Administration (EIA), natural gas production increased for three
consecutive months from January to March 2010. The natural gas
rig count and horizontal rig count have increased by 4 percent
and 12 percent, respectively, from the March average – a good
indication that the industry can expect production to continue
to grow in the upcoming months. Also, a substantial increase in
well permits in Alberta and a surplus in Canadian storage
inventory levels suggest Canadian gas imports in 2010 will be
higher than the previous year.
Factor - Demand
Commentary
With Industrial Production indices and positive housing
statistics pointing to an economic rebound, industrial gas
demand is steadily rising back to 2008 levels. Meanwhile, above
normal temperatures and competitive coal-to-gas pricing are
driving gas-fired electric generation demand..
Factor - Weather
Commentary
The cooling degree days in May were 14 percent above normal,
with much of the warmer than normal temperatures concentrated in
the eastern half of the country. The outlook for the early
summer months is intense heat over the southern portions of the
country and along the eastern seaboard. The consensus among
weather forecasters is to anticipate a much more active
hurricane season than in 2009.
Factor - Storage
Outlook
Effect on price
Commentary
Robust natural gas storage injections have kept the national
inventory level above the 5-year average, but all the injections
reported in May have been at or below prior-year levels. The
storage numbers are expected to continue coming in below last
year’s levels to slowly eat away at the 71 billion cubic feet
year-over-year surplus over the course of the next two months.
Factor - Economy
Commentary
During May, the Dow Jones Industrial Average responded to
the worsening financial crisis in Europe by posting the steepest
percentage drop since 1940. The vulnerability posed by the Greek
debt crisis seems to be more than offset by the near-term
constructive signs from key economic indicators, however.
Factor - Summary
Commentary
Despite major production increases, the economic rebound
seems to be contributing to greater demand for fossil fuels,
particularly from the industrial sector. Meanwhile, weather
forecasts for the summer months indicate warmer than normal
temperatures for much of the nation – thus driving greater
electric generation.
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