The Kobiona Monitor
Volume 1 / Number 11
October 17 , 2019
Kobiona’s leadership has enlisted the help of our Market Intelligence Desk to craft this monthly publication to share major market dynamics impacting future power and gas prices. As every client’s situation is unique, we encourage you to review market movements with us to decide whether any action on your part could serve to lower your future costs or avoid known, coming increases.
Since natural gas is now the primary fuel source for power plants across the U.S. and prices closely correlate to power futures, we monitor natural gas supply and demand fundamentals very closely.
Prompt Month Prices
NYMEX prompt month (November) closed on Friday, October 11 at $2.21/MMBTU, about $.50 lower than mid-September’s levels that were close to $2.70/MMBTU. Natural gas prices have come off considerably since this time one year when an MMBTU was trading over $3.25.
NYMEX Prompt One Month Lookback
NYMEX Prompt 12 Month Lookback
Dry Natural Gas Storage
After a series of healthy injections, in its October 10th report the EIA reported inventories now stand at 3,415 BCF — only .3% (9 BCF) below the 5-year average of 3,424 BCF. (Reminder: Inventories were 33% below the 5-year average last November.) This remarkable recovery, if you will, has kept power prices within 10% to the 5-year minimum throughout most of 2019.
Natural Gas Production
For the week ending October 2, dry natural gas production reach a new historic high of 94 BCF/day, up from 86.7 BCF/day just one year ago. The EIA is estimating production will continue at 93.5 BCF/day through 2020. However, Baker Hughes puts the natural gas rig count as of October 3 as 144. A year ago the count was 189. This could foreshadow a production slowdown in the first two quarters of 2020.
For he latter half of October, NOAA is forecasting continued cold in the Midwest with above average temps in the East, despite quite a bit of rain persisting through the balance of the month. A lack of premature heating demand should help keep gas inventories strong as we head into November.
Agera Energy Files for Chapter 11 Bankruptcy Protection
Agera Energy and its affiliates have filed for chapter 11 bankruptcy protection in the United States Bankruptcy Court, Southern District of New York and is facilitating an asset sale to Constellation, a subsidiary of Exelon Corporation (Nasdaq: EXC), subject to bankruptcy court approval. If approved by the bankruptcy court, the majority of Agera’s existing customers will be transferred to Constellation upon completion of the sale.
“Due to unforeseen circumstances impacting the viability of Agera Energy’s business and its objectives, the company’s management team has made the decision to facilitate a sale under chapter 11 to minimize disruptions to our customers,” comments Mark Linzenbold, CFO of Agera Energy. “While we are deeply disappointed to be filing bankruptcy, we’re excited that a market-leading energy company will be able to continue serving our customers’ needs.” Source: Businesswire.com
If you are a current Agera customer, please reach out to learn about the potential impacts this can have to your business. We can help you can proactively prepare for this transition.
Halloween: Generate Your Own Electricity!
We thought it might be fun to leave you with some electricity fun. Here’s a experiment to try at home with the kids — or in the next office with your co-workers! Happy Halloween!
Send us your potato selfies at: firstname.lastname@example.org
For those tasked with procuring power and gas for the first time — or the tenth time — the industry can seem overwhelming with densely-technical and sometimes conflicting information. We welcome your questions on how to apply our observations, as well as your feedback on The Kobiona Monitor. Please share how we can make this publication more useful by calling us on 844-209-7972, or contacting us via email, email@example.com.