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Welcome to the ECNG MarketWatch
June 5th, 2009
| Natural Gas |
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Aeco (Cdn$/GJ)
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Nymex(U.S.$/mmbtu)
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June 4
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May 28
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Change
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June 4
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May 28
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Change
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Jul09-Oct09
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$3.26
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$3.51
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-7.0%
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$4.04
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$4.14
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-2.3%
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| Nov09-Oct10 |
$5.47
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$5.53
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-1.0%
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$6.02
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$6.01
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0.2%
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| Nov10-Oct11 |
$6.52
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$6.60
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-1.2%
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$7.05
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$7.03
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0.3%
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| Nymex Prompt Prices |
June 4
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May 28
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Change
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Natural Gas (U.S. per mmbtu)
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$3.810
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$3.957
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-3.7%
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Crude Oil WTI (U.S. per barrel)
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68.81
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$65.08
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5.7%
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| Currency |
June 4
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May 28
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Change
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| USD/CAD |
$0.911
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$0.897
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1.6%
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Despite the declining rig count, inventories continue to rise at a higher than average rate. In the most recent weekly storage report, the EIA reported that working gas in storage rose by 126 Bcf for the week ending May 29. This is approximately 10 Bcf above forecasts and 30 Bcf higher than the average weekly injection for this period. Storage now stands at 2,337 Bcf, 546 Bcf above the same period last year, and 423 Bcf above the five year average. This is the highest level of storage on record for this point in the injection season (see chart below).
Even though falling prices have incented drillers to significantly reduce their activity, production continues to outstrip weakened demand from the Industrial and Power sectors. Some fuel switching from coal fueled power generators to efficient gas plants has been occurring when prices are below $4, but gas prices will need to remain below that level for this to have a material impact on the demand/supply balance.
The Canadian Dollar continues to rise alongside crude oil as the US dollar weakens. An increased risk appetite from market participants has lead to selling of US treasuries as they move into equities and commodities. The decreased demand for the Greenback amid inflation concerns has been the primary driver of the recent surge in the price of crude oil to (approaching $70 per barrel). As mentioned in previous newsletters, a rising Canadian Dollar makes purchases at Aeco cheaper, all other factors remaining equal.
Transportation rates from Aeco to Dawn, Parkway and CDA have become quite attractive recently. Consult your client services rep for a recommendation based upon your consumption profile and risk tolerance.
www.ecng.com
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| Ontario Electricity |
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| Average ON PEAK Price for May: |
3.5 cents / kWh |
| ON PEAK Hours over 7.0 cents: |
0% in May. |
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8% year to date |
| Highest price in the past week: |
6.2cents / kWh on May 27th |
With the very low levels of industrial activity in Ontario (due to the automotive problems and worldwide recession), power demand has been curtailed also.
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As you can see from the graph of demand, there is traditionally a low point reached in May of each year, since the weather is mild so air conditioners are not running and (usually) furnaces aren’t either. But we are setting new lows in Ontario this year.
We have gone from a monthly average demand of 15,885 MW in May 2007, to 15,331 MW in May 2008 and now to May 2009 with a monthly average demand of 14, 119 MW. This represents an 11% drop from 2007 and an 8% drop from 2008.
The lack of demand is also reflected in the operation of the coal fired generators operated by Ontario Power Generation. For the past 11 days (May 24 to June 3) the coal plants have routinely produced 5 MW of power in the overnight hours, out of a possible total 6,400 MW of coal generation that could be operating. That is less than 1% of their capacity. OPG will have no trouble meeting their greenhouse gas emission target for 2009 of 19.6 megatonnes of carbon dioxide. They are on track to produce about 14 MT at current rates of production (but this will likely rise in the summer when demand spikes for air conditioning).
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