Breaking News
Black Friday SALE: Up to 54% off InvestingPro! Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Natural Gas Not Shaken By Coal In U.S. Energy Fuel Mix

By Investing.com (Barani Krishnan/Investing.com)CommoditiesOct 28, 2021 03:38AM ET
www.investing.com/analysis/natural-gas-not-shaken-by-coal-in-us-energy-fuel-mix-200606610
Natural Gas Not Shaken By Coal In U.S. Energy Fuel Mix
By Investing.com (Barani Krishnan/Investing.com)   |  Oct 28, 2021 03:38AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Regional market dynamics and generational capacities decide how much is allocated to each energy source that makes up the power that’s generated in the United States each week.

The US fuel mix for electricity generation presents a bird’s eye view of the interplay that occurs between the different fuels nationally. The narrative is that natural gas has remained America’s top fuel for this in October, providing anywhere between 35% and 40% of generation for each week. 

Indications are that the fuel mix will not change much either, going forward.

US Fuel Mix Weekly Storage
US Fuel Mix Weekly Storage

Source: Gelber & Associates

This is despite concerns that there’ll be inadequate supply of gas for both power and heating purposes during the peak of the coming winter in the United States. 

Natural Gas Weekly TTM
Natural Gas Weekly TTM

There are also growing fears by the day that gas prices will be too high by the winter—they are already up almost 140% on the year, trading at just above $6 per mmBtu, or million British thermal units now, with forecasts for $7 pricing by January/February.

This has spawned speculation that coal—which has rallied as much as gas percentage wise this year but remains relatively cheaper in absolute price—could cannibalize a significant portion of the gas allocation for power generation if utilities could lay their hands on adequate supplies of this energy source in crunch time.

A slide of the US fuel mix made available to Investing.com on Thursday by Houston-based energy consultancy Gelber & Associates shows coal’s share of generation was less than 25% at its peak this month, with a descending scale to around 20%.

“Declining total power generation during this week saw energy generators opt to decrease generation from coal and wind plants as opposed to natural gas—as a result, natural gas’s percentage in the fuel mix has remained relatively consistent through the week of storage,” Gelber analyst Dan Myers said in an email to the firm’s clients, shared with Investing.com.

Myers said an early study of next week’s storage levels for natural gas suggests that the gas share of generation was set to increase to above 40%. He said this “lines up perfectly with prices” of gas, which had been volatile lately, swinging from a low of $4.825 mmBtu this week to a peak of $6.280. Myers added:

“Ultimately, reliance on gas during this week’s storage indicates that gains from higher production and lower export demand have the potential to be offset by higher gas demand.” 

Weekly NatGas Storage Changes
Weekly NatGas Storage Changes
      

Source: Gelber & Associates

The Gelber study comes just ahead of the weekly update on gas storage due from the EIA, or Energy Information Administration, at 10:30 AM ET (14:30 GMT) today.

Myers’ consultancy is predicting that the EIA will report that utilities in the country injected 87 bcf, or billion cubic feet, into storage for the week ended Oct. 22. That is just a notch above the 86 bcf average estimated by analysts tracked by Investing.com.

That would compare with a build of 32 bcf during the same week a year ago and a five-year (2016-2020) average increase of 62 bcf.

In the prior week to Oct. 15, utilities injected 92 bcf of gas into storage, which was the sixth week in a row that utilities stockpiled more gas than usual.

If analysts are on target with their call for an 86-bcf injection, that would take inventories to 3.547 tcf, or trillion cubic feet. That would still be some 3.5% below the five-year average and 10.2% below the same week a year ago.

Analysts are betting that last week’s storage injections surpassed annual and five-year norms due to milder-than-normal weather with 60 TDDs, or total degree days, compared with a 30-year average of 78 TDDs for the period. TDDs, used to estimate demand to heat or cool homes and businesses, measure the number of degrees a day's average temperature is below or above 65 degrees Fahrenheit (18 degrees Celsius).

NatGasWeather, in a forecast carried by naturalgasintel.com, said the closely-followed Global Forecast System trended a little chillier overnight for next week and then continued to add demand in the midday run. 

This pushes the Nov. 1-7 outlook toward the bullish side, according to the forecaster, as lows of teens to 30s Fahrenheit were set to increase in coverage over the northern United States and down the Plains.

“The pattern Nov. 8-11 still favors national demand easing to lighter levels,” NatGasWeather said. “However, as we’ve been mentioning, the theme going back to last week has been for seemingly bearish/mild days in the 12- to 15-day period to add demand as they roll into forecast days 6-11.”

This could continue to occur as the upper pattern favors ways in which colder Canadian air can sneakily slide into the Midwest and interior Northeast for the Nov. 8-12 period. 

The forecaster also noted that there would be stronger cold shots into Europe in the coming couple of weeks, resulting in a drawdown of storage that already is precariously light ahead of winter.

Rystad Energy, also cited by naturalgasintel.com, noted that even with milder-than-normal temperatures over the past week, storage levels in Europe had started to decline. Analysts at the firm noted a 0.5% drop week/week in inventories. Rystad senior analyst Wei Xiong said:

“An earlier start of withdrawals compared to previous years may limit downside to easing Title Transfer Facility prices.” 

Meanwhile, further price support is provided by a forecast of temperatures dropping close to normal across Northwest Europe in the coming weeks. Xiong noted that this is a revision from prior expectations of above-normal temperatures in that time frame. However, she said the upside risk is balanced by the recent decline in coal prices that may trigger additional gas-to-coal switching on the Continent.

Disclaimer: Barani Krishnan uses a range of views outside his own to bring diversity to his analysis of any market. For neutrality, he sometimes presents contrarian views and market variables. He does not hold a position in the commodities and securities he writes about.

Natural Gas Not Shaken By Coal In U.S. Energy Fuel Mix
 

Related Articles

Phil Flynn
Energy Report: COVID And Turkey By Phil Flynn - Nov 26, 2021 2

Once again Thanksgiving oil markets lived up to their notorious holiday reputation plunging on light holiday volume in response to reports of a new Covid Variant found in South...

Natural Gas Not Shaken By Coal In U.S. Energy Fuel Mix

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
SunilKumar Dixit
SunilKumarDixit Oct 28, 2021 7:18AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
While Nat Gas is seen rebounding from recent lows, it also has a wide gap to be filled in down at 5.37
Lindsey Sanford
Lindsey Sanford Oct 28, 2021 7:17AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Manipulation
Jack Mayoffer
Jack Mayoffer Oct 28, 2021 7:04AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It will be soon...so much NG out there...Bearish Data almost every week and this JUNK keeps going UP...JUST MANIPULATION nothing else...imo..hik hik
Geo Don
Geo Don Oct 28, 2021 7:04AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This is not manipulation. Is just Russian power.
SunilKumar Dixit
SunilKumarDixit Oct 28, 2021 7:04AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Geo Don. You are right. Gazprom weilds it's influence too.
lord oil
lord oil Oct 28, 2021 7:04AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Now russia is going to pump to eu price will gradually fall before a possible rise
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email