The Kobiona Monitor

Volume 1 / Number 12
November 26, 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.

Near-Term Weather
For the balance of November and the beginning of December, NOAA is forecasting below-average temperatures in the West, above-average temperatures for the East, and average temps in the Middle of the Continent. Preliminary outlooks also suggest a mild December absent of extreme cold in most of the country.

 

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 (December) closed on Tuesday, November 19 at $2.51/MMBTU, a remarkable $2.19 lower than the prompt month was trading a year ago today.

NYMEX Prompt One Year Lookback

Source: Nasdaq

Dry Natural Gas Storage
In only one prior year, 2015 – the year following the Polar Vortex – did the U.S. produce and store and much gas as 2019. During this year’s injection season, the country has stored 2,599 BCF of gas.

As of its November 14th report, the EIA reported natural gas inventories of 3,732 BCF — .1% (2 BCF) above the 5-year average of 3,730 BCF and 15% above levels at this time last year. This remarkable recovery has kept power prices within 10% to the 5-year minimum throughout most of 2019. And, should this winter come in mild to normal, will likely bring unprecedented buying opportunities in Q1 of 2020 in both power and gas.


Buying Opportunities – Put the Calendar Away! 

A reminder that buying opportunities can present themselves in any and every month of the year. Buyers have been trained to believe the best times to buy are Spring and Fall. While that may have been true a decade ago, that’s simply not the case any more. In the past four years we have seen the market hit record lows in every single calendar month. With current conditions as they are – a healthy storage picture and consistent production – if we see a mild winter the market could easily reward buyers with significant opportunities for future years from December through March. This is an excellent time to be closely monitoring pricing for all future terms.

 

 

 

 

 

 

 

Questions?
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, info@kobiona.com.