Energy Outlook, Q2 2015 Market Intelligence Update

Jonathan Lee, Senior Energy Market Intelligence Manager at ENGIE Insight

Over the last couple of months, wholesale natural gas prices have fallen to their lowest level since June 2012, nearly a 45 percent reduction from the prior year. Several regional wholesale electric markets have also experienced significant price-relief. Are these prices here to stay or can we expect upward movement in the near future? Our upcoming energy market intelligence webinar will examine the current state of the energy market, factors influencing price movement, and how various regions
are affected.

The booming natural gas production industry did a tremendous job re-balancing supply with demand after the extreme winter of 2013/2014. During last year’s injection season, the industry added a record 2,789 Bcf of gas into storage. This year, production is trending around seven to eight percent above last year, causing supply to outpace demand, which has in turn pushed prices to two-and–a-half year lows. Is it possible the industry could add enough gas into storage to top 4,000 Bcf for the first time in history? In the webinar, we will take a look at the main factors standing in the way of achieving that feat. As we saw in 2012, when there is a potential to reach record levels of gas in storage, prices come under increased downward pressure. But depressed gas prices also lower the variable costs of gas-fired electric production and make it more competitive with the variable costs of running a coal-fired plant, thus incentivizing higher power sector demand through coal-to-gas switching.

The energy landscape is facing some big fundamental shifts this year. Due in large part to the implementation of the EPA’s Mercury and Air Toxics Standards rule (MATS), around 14,000 MW of coal power plants (roughly 4.6 percent of total U.S. coal plant capacity) are scheduled to retire in 2015. New natural gas-fired generation and renewable energy are expected to make up the lost generation. In the webinar, we will look at how this shift has affected capacity prices in the most heavily impacted regions. Additionally, the first liquefied natural gas exporting facility in the lower 48 states is scheduled to begin operations in late 2015. We will discuss how the once insulated domestic gas market may start to see global factors play a role in price movement in the coming years.

With the energy markets seemingly always in state of change, what actions can a company take now to take advantage of the current low prices? Learn more by joining us for the upcoming webinar on June 2nd, “Energy Outlook, Q2 Market Intelligence Update.”

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The information in this page is offered only for general informational and educational purposes. It is not offered as and does not constitute legal advice.

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