Market Update 12-05-2016

December 5, 2016

Heating Oil

  • Prompt-month heating oil futures increased 11.57% for the week ending Friday, 12/2, as prices rose 17.19 cents per gallon.
  • On the New York Mercantile Exchange, crude futures for delivery in January closed at $54.46 per barrel on Friday, up 1.08% for the day, and increasing 12.89% for the week.
  • Crude oil prices continued to climb on Monday after a major increase during the tail-end of last week. This increase follows a successful OPEC meeting on November 30th at which an agreement was reached regarding a production cut. Oil prices hit their highest point since July 2015, and saw the largest one-week increase since February 2011, as investors remain bullish and hope that the deal to limit oil supply will be put in effect without issue.

Natural Gas

  • Prompt-month (January) natural gas futures increased 23.4 cents, or 7.59%, for the week ending Friday, 12/2, to settle at $3.436 per million British thermal units (mmBtu).
  • Overall supply remained steady, while total demand decreased by 3.09% from last week.  The change in demand was partially due to a 3.18% decrease in US consumption.
  • The net injection reported for the week ending November 25th showed a net withdrawal of 50 Bcf, while the 5-year average for the week is a net withdrawal of 44 Bcf. Last year’s net withdrawal was 35 Bcf.  Working gas inventories are at 3,995 Bcf, totaling 24 Bcf more than last year at this time, and 235 Bcf higher than the 5-year average.
  • Market expectations called for a withdrawal of 51 Bcf. When the EIA storage report was released at 10:30AM on Thursday, the price for the January natural gas futures contract varied within 1 cent, trading at $3.45/mmBtu on the NYMEX.

Electricity

  • Average peak prices in NYC rose last week, moving up $1.76 to $34.00 per MWh. Peak prices hit a high of $48.80 between 5-6 PM last Monday, 11/28, in NYC; Peak prices in PSE&G increased, rising $1.03 to average $26.72 per MWh, topping out at $45.31 on Friday, 12/2, between 5-6 PM.
  • Around-the-clock prices for the balance of 2016 increased $1.70 per MWh in NYC and increased $0.61 per MWh in PSE&G. Calendar 2017 prices in NYC increased $1.56 per MWh, while PSEG prices increased $0.50 per MWh.
  • Peak electric pricing rose in NYC last week as the cool weather kept heating demand steady.  This week, temperatures are expected to be significantly colder, so prices may see a bit of a jump as even more people begin relying more on heat and preparing for the colder weather ahead.  Futures markets saw increases from last week as forecasts for cooler winter weather were released.

Weather

  • Temperatures averaged 5.29°F above seasonal figures this past week (ending 12/4), coming in 2.00°F below forecasted values. This week, the NYC area is expecting temperatures to cool down, with highs around 45°F and lows around 36°F; Temperatures are forecasted to be 0.14°F above seasonal averages, and 7.71°F colder than last week’s average.
  • Temperatures were above seasonal averages last week, though they remained just shy of forecasted highs. Look for this week’s temperatures to fall closer to seasonal norms and end up significantly below last week’s averages for a cold stretch of December weather. The 90-day forecast is predicting the Northeast to be slightly above seasonal norms, but new reports that this winter may be colder than anticipated are casting doubts on previous expectations.

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