Natural Gas Storage and Usage
Storage Levels Continue to Grow, but Not as Strong as Expected
Storage injections continue to replenish supplies depleted over our last winter; surpassing historic average injection rates for the 16th consecutive week. However, last week’s injection of 82 billion cubic feet fell short of expectations. US natural gas storage totaled 2.389 trillion cubic feet, further reducing the deficit from the 5-year average to 20% from 21.7% and down from a record deficit of 54.7% at the end of March.
Weather Forecast : Transition to El Nino Conditions; Above Average Temperatures
The weather agencies are all predicting a transition to El Niño conditions is underway. During El Niño conditions, the northern tier of the lower 48 states exhibits above normal temperatures during the fall and winter, while the Gulf coast experiences below normal temperatures during the winter season
The temperature outlook for August-October indicates above-normal temperatures in the West, Southern Texas, Southeast and parts of the Mid-Atlantic States. Below average temperatures may be felt in the Northern Rockies and Midwest.
Above average temperatures may lead to higher electricity consumption, resulting in higher prices. Also, higher temps may increase natural gas consumption at electric generation stations, thus causing reduced storage injections of natural gas. If the predicted above average temperatures occur, natural gas prices
EC-Equal Chance for A.N.B. A- Above N- Normal B - Below
Natural Gas Prices Move Up Each of the Last Three Weeks
Natural gas prices generally increase across most markets in August. NYMEX natural gas deliveries for September continue to rise since Mid-July; peaking over the $4.00/MMBTU level.
In August, Henry Hub prices started at $3.75/MMBTU and have steadily risen to market influencers like mild weather, increasing storage injections and a decrease in energy consumption typically cause prices to soften.
Energy Price Sensitivity in the Northeast
The Northeast natural gas prices have proven to be more sensitive to temperature than other regional markets. A few points about the Northeast energy and its correlation to temperature:
During summer months, the largest increase in natural gas consumption comes from the electric power generation sector, due to the increased need for cooling in homes.
As temperatures approached 90 degrees in New York and New England during July and August last year, natural gas spot prices surpassed $5 /MMBtu at hubs serving those areas. However, prices remained below $5/MMBtu at the national benchmark Henry Hub in Erath, Louisiana, and at the Tetco-M3 Mid-Atlantic hub near Philadelphia.
The northeastern United States is increasingly reliant on natural gas for power generation. In 2013, natural gas-fired power provided 44% of net electric power sector generation in the New England U.S. Census Division, versus a 26% naturally.
Note: Lines represent best-fit second-order polynomial equations based on a scatter plot of temperatures observed at major airports in each city, and prices at nearby market hubs. Best-fit lines do not extend to cover the entire range of all temperature and price observations. Spot prices are by delivery date.
Bottom Line: Natural Gas Prices Have Started to Move Upward
Are you Prepared?
Congratulations to all of you who secured long-term energy prices these past few weeks.
We have seen prices begin to move upward; when many market indicators would have normally driven it downward. Mild weather, low energy consumption and increased gas storage injections typically hold prices steady, if not cause them to drop. Now is the time to look at securing longer term natural gas and electric contracts of 24 to 36 months. Look to lock in winter gas now, before the El Niño and the real summer returns or a significant event happens.
As a caution to our clients during energy supply contract negotiations, please make sure transmission, capacity and ancillary charges are included in the price offerings and they are not just listed as a pass-through charge. We have seen several suppliers try to make their prices appear lower by not including these components in prices; just to give the appearance of lower prices. Don’t be fooled; let AUM help.
“You lose with potential. You win with PERFORMANCE.”
- - - Bill Parcels, Hall of Fame Football Coach
Yes, it’s almost football season, but this truism applies not only to sports, but also to business. Our season is every day of the year. We all strive for peak performance; yet without a great way to measure our progress, our efforts are meaningless. The all-telling statistic that measures success in business is the income statement, and the difference between wins and losses is Net Operating Income, or NOI.
In Multifamily, a key component of improving NOI for property owners is the ability to manage energy expense and usage. The ability to transform energy expense data into information means the difference between profit and loss.
AUM Performance Dashboards reduce millions of data points into simple, visual information that allows Multifamily property owners to make critical energy expense decisions quickly. The Dashboards enable owners to view their performance at a single glance for their entire portfolio or an individual property. With just one click on a performance gauge, owners see actionable opportunities for improved performance.
Some key features of this new tool:
Critical Key Performance Indicators (KPI) on a single screen.
Easy to read gauges for quick visual analysis
Interactive gauges for simple drill down to more detail in chart or table format.
Each new view opens in a separate tab for fast & easy switches, comparisons, analyses, & root causes.
Ability to be used anywhere you have an internet connection – including your mobile devices.
So, whether you’re managing energy usage, utility expenses, vacant cost recovery, resident billing, invoicing or late fees, AUM’s Performance Dashboards on our Advanced Analytics platform provides all the energy and utility knowledge you need to support your decisions and help you maximize your NOI, and be a winner. . .even by Bill Parcell’s standards.
Now is the time to start securing longer term natural gas contracts of 24- to 36- months. Time is running short to lock in low summer energy prices for both natural gas and electricity. Any worries about low storage levels going into this winter are waning with recent high injection reports. Look to lock in winter gas now, before the real summer returns or a significant event happens.
Since our June report, natural gas storage levels received an injection boost of 430 BCF. While storage levels are still lower than in years past, natural gas storage has reached 80% mark of the 5-year storage levels. Good to see a strong recovery from this winter’s polar vortex.
Weather Agencies are predicting below average temperatures for the next 6-10 days for the middle US with above-normal heat for the West and Southeast. We are about half-way through summer and most regions have not experienced hotter than normal temperatures, as NOAA predicted. The longer we go without prolonged high temperatures; the larger our natural gas supplies will be for next winter. Also, our first hurricane, Arthur, had little impact on energy prices.
In June, NYMEX natural gas prices set a new high 52-week high of $4.87. The first week in July has seen prices drop to $4.19 / MMBTU; a 14% price drop.
Daily electric prices have seen the normal bump-up that summer brings. However, in all deregulated markets, except the Northeast, future prices increase each calendar year of 2015, through 2018. In the NY & PJM West, the future market prices see 2015 high and decline or are flat through 2018.
Bottom Line: Take Advantage of Soft Market
Now is the time to start securing longer term natural gas contracts of 24- to 36-months. Time is running short to lock in low summer energy prices for both natural gas and electricity. Any worries about low storage levels going into this winter are waning with recent high injection reports. Look to lock in winter gas now, before the real summer returns or a significant event happens. Additionally, electricity pricing has stabilized further into the future; look to longer term contracts (24- to 36-months).
A caution to our clients during energy supply contract negotiations: make sure transmission, capacity and ancillary charges are included in the price offerings, not just listed as pass-through charges, causing prices to appear lower. Don’t be fooled; let AUM help.
From the Chicago Tribune, May 7, 2014 –
Just as the Chicago area is getting ready for air conditioning weather, residents can expect to be jolted by higher electric bills. Starting June 1, Commonwealth Edison customers on average will see monthly bills jump 21%, to about $82 a month from about $69 a month.
Multifamily property owners and managers on variable market rates or still on Com Ed Rates will see significant price spikes. You can protect yourselves and your residents against dramatic fluctuations in energy commodity rates through expert energy procurement.
Before the hot summer electric bill price spikes occur, contact AUM for a review your current contracts & discussions for alternatives to this increase. You have options – keep your residents satisfied.
Natural gas and electric prices continue to trade higher than last year. High heating demand and increased industrial demand have contributed to higher pricing. We expect the economy to continue improving, thus keeping industrial demand going strong. We expect that the risk of higher pricing for both natural gas and electric supply outweighs any pricing downturn opportunities. For clients still exposed to utility default pricing or variable pricing for both electric and natural gas loads, we highly recommend reviewing your accounts and negotiating for fixed contracts. Clients should seriously consider securing fixed contracts with longer positions in the market with 24- and 36- month terms.
Natural Gas Storage and Usage
The month of April is complete and the weather still feels like late October. It feels like the weather will jump from winter to summer without much of a buffer. Meteorologists are still determining if the past winter was the 2nd or 3rd coldest in recorded weather history. Does it really matter?
Spring time usually has a calming effect on energy prices due to low demand for cooling or heating. But this year heating demand is still higher than normal in many areas, even though the summer season is fast approaching.
The current concern is the upcoming summer season with natural gas storage at an 11 year low - approximately 50% below the five-year average. To refill the storage to sufficient levels, (the 3.4 Tcf range by November 2014), storage injections need to average 86 Bcf per week. To note, the highest-recorded average weekly injection number was 80Bcf, in 2003. The market has started to show its doubts by recent price hikes. Producers will need to increase their storage injections during the summer months, increasing demand. In addition, if the hot summer temperatures are above average, we will have another demand component to deal with as electric generators will require additional fuel, with excess demand causing upward price pressure.
This past month we experienced the first storage injections of the season and the first monthly gain of 159 Bcf since the beginning of the heating season. Natural gas in storage is currently at 981 Bcf, almost one Tcf below the five year average figure (50% below) and 790 Bcf below last year’s level (45% below).
Weather forecasts are encouraging for the next 60 days. Temperatures are expected to stay in normal ranges during the next two months with limited seasonal energy demands. If this weather trend proves true and continues into July, we could see a boost in storage injections because production continues to set records. A month ago, NOAA was predicting summer temperatures hotter than normal by at least 5% as they compare to the 30-year average and definitely hotter than last year. Only time will tell.
Natural Gas Production and Pricing
Let’s revisit the facts stated previously: The natural gas storage inventory is the lowest it has been over the last eleven years, check. Current temperatures do not allow for a robust start of the shoulder season injections, check. Industrial demand for natural gas is rising, check. Several nuclear plants are retiring, check. The upcoming summer weather cooling demand is projected to be higher than last year and we have not experienced an active hurricane season for some time, check. Five for five in any other category would have been great but in this case it is of great concern.
Early this week the May 2014 natural gas contract settled at a price of $4.795 per MMBtu, a 5% increase from last month’s figure. The May settlement was 16% higher than last year’s May settlement. The NYMEX natural gas price curve depicted below includes a polynomial trend line curve which continues to show a sustained upward trend. The weather will continue to be the driving factor behind future pricing inclusive of the additional factors listed above.
Despite a great reduction in the active US natural gas rig count (currently at 310 rigs), production is still running at 67 Bcf per day, a record amount. Our actual rig count is down by 59% compared to the five year average of 758 but shale gas is definitely pulling us through with 15.7 Bcf daily coming just from the Marcellus shale.
A positive outcome of the higher natural gas prices is that they have helped reduce demand from power generators by 7% compared to last year. If prices remain at current levels we do not see much switching coming from current coal burning plants.
As of April 24th, 2014 the 12-month average forward pricing curve for natural gas is at $4.74 per MMBtu, compared to last month’s $4.55 per MMBtu price. We do not have anything left in the current heating season, but next heating season of November through March, is at $4.75 per MMBtu.
The effect of the much colder than average temperatures on market pricing is very obvious. Many could say that now is too early to start thinking about next winter season especially after the mess we had to deal with over the last six months, but if the upcoming summer hits the forecasted above-average temperatures with a sprinkle of hurricanes and the current storage situation experiencing levels 50% below the five-year average, we could be heading towards the perfect energy pricing storm.
Some of our clients did take advantage of the low pricing positions back in May/June of 2012 while several clients grabbed the pricing opportunity last fall and secured contracts in order to cover their loads through 2014 and 2015, but those low-priced contracts are coming up for renewal, and they will experience the current market uptrends. Our projection that the natural gas market will stay in the $4.50 per MMBtu range remains, and we still do not expect to see pricing below the $4.00 mark any time soon. Now is the time to start securing loads currently riding variable rates for the upcoming summer, but we are running out of time. Short-term contracts of 12 months or less are currently very expensive, longer term contracts of 24- and 36- month terms offer better pricing blend. The pricing negotiated now could be a bargain compared to what is coming.
The natural gas market has entered a process of setting a long term bottom in prices, consumers spoiled by a few recent years of low energy pricing will have to eventually adjust their expectations and move forward with renewed pricing targets and risk assessments.
Natural gas and electric prices continue to trade higher than last year, as high heating demand and increased industrial demand have contributed to higher pricing. We expect the economy to continue improving, keeping industrial demand going strong, while the 2013-14 heating season could have established the bottom-price thresholds for the remainder of 2014 and beyond.
We expect that the risk of higher pricing for both natural gas and electric supply outweighs any pricing downturn opportunities. For clients still exposed to utility default pricing or variable pricing for both electric and natural gas loads, we highly recommend reviewing your accounts and negotiating for fixed contracts. Capacity charges for next winter are already setting records in the Northeast. Clients should seriously consider securing fixed contracts with longer positions in the market with 24- and 36- month terms, as commodity and capacity pricing tend to stabilize into the future.
As a caution, during energy supply contract negotiations, please make sure capacity charges are included in the price offerings and they are not pass-through. They can be devastating for your budget if not secured. The main concern right now is natural gas storage inventories for next winter. We will know this possibly by the middle of the summer; I would not recommend waiting that long.
Today, the Boston City Council voted to approve the bill filed by Councilor Frank Baker to delay the implementation of the energy reporting and disclosure mandate in Boston for one year. The lone vote against the measure was Councilor Matt O’Malley (D-Jamaica Plain).
Click here to read the delay amendment.
In 2013 the City of Boston approved a new mandate requiring owners with buildings over 35,000 gross square feet to report and publicly disclose energy and water use. The law was to be phased in over three years starting this year.
Nine cities and two states have adopted energy benchmarking and disclosure laws. While all of them require building owners to track their properties' energy use, the laws vary regarding the size and type of buildings they affect; whether the energy use data must be disclosed publicly, or just to potential tenants or buyers; and other factors.
Major unresolved issues have led to delays in implementation in other cities. Seattle has revised its originally planned program and has twice postponed the date by which reporting is to occur for residential buildings. Washington DC has had several years of delays and only recently issued rules nearly five years after the law was enacted.
AUM will continue to keep multifamily property owners affected by this mandate and otherbenchmarking and disclosureinitiatives as they occur.
Today marks the 44th celebration of Earth Day. This global recognition of the importance of environmental consciousness started in San Francisco in 1969, when environmental activist John McConnell proposed a day where people would raise awareness for ways to preserve Earth's natural resources and protect its species, as well as celebrate the beauty of the planet.
Today, Earth Day is observed in 192 countries. Whether it's a massive public rally, a private event, or an individual contribution, there are many ways to participate. Efforts can range from organizing environmental fundraisers, to planting a tree, to taking care to use less water and paying extra attention to how many lights are left on.
Conserving energy is an important way to reduce strain on the environment and bring down expenses. Applying simple practices in your property's lighting, water, and HVAC systems can go a long way toward shrinking your carbon footprint and increasing your NOI.
Embrace natural light. During the day, think of the sun as your primary light source, and rearrange space take advantage of its rays. Open the shades or blinds and let the light pour in instead of automatically flipping on the overhead switch. Try to arrange your desk so that it's lit by natural light, so you won't have to use a desk lamp or overhead lighting.
Replace your incandescent light bulbs. These old-fashioned light bulbs burn off most of their energy as heat, rather than producing light. Replace them with compact fluorescent bulbs or LED bulbs, both of which are much more energy efficient.
Minimize your use of outside lights. A lot of people don't think about how much energy is being used by porch lights or path lights that stay on all night long.
A recent study showed that 99% of business managers surveyed ranked water conservation as a “top five” priority over the next decade. The first step in understanding where you can conserve water usage is to conduct a water audit to find optimal water use. Then, monitor your utility bills to gauge monthly consumption.
Here are some useful tips to help conserve water at your properties:
Be sure your irrigation system is watering only the areas intended, with no water running onto walks, streets or down the gutter.
Marry the weather with your landscape water use. Water use should decrease during rainy periods and increase during hot, dry periods.
Inspect your landscape irrigation system regularly for leaks or broken sprinkler heads and adjust pressures to specification.
Heating and Air Conditioning
Clean and repair heating, venting, and air conditioning (HVAC) system on a routine basis. A clean and working HVAC system will help largely reduce your energy bills.Clean or replace the office's HVAC air filters, and clean all the evaporators, condensers, coils, and heat exchanger surfaces at least once per month. In some cases, you may need to hire an HVAC contractor to safely and effectively perform these tasks for you.
Currently, the risk of higher pricing for both natural gas and electric supply outweighs any pricing downturn opportunities. For property owners still exposed to default pricing or variable pricing, we highly recommend reviewing your accounts now, and preparing for negotiations during possible upcoming pricing breaks. Daily market pricing for the northeast markets, especially New England, continues to set daily records. If all goes as predicted over the next several weeks, expect some pricing decline, with buying opportunities in late February or early March. You should consider longer positions in the market, with 18-, 24- or even 36-month terms and delayed contract starts. Commodity and capacity pricing tend to stabilize further into the future.
Natural Gas Storage
Wow, what a difference a month makes. Many of us survived a very cold December and actually looked forward to a snow-covered Christmas Holiday. Unfortunately that was not the end of the story. January came in with a vengeance, registering some of the lowest temperatures many of us have seen in a very long time. On Monday, January 6th, 2014, below-freezing temperatures registered in all fifty states, including Hawaii.
Since our last report we continued to experience record high withdrawals from the national natural gas storage. Last week the Energy Information Administration (EIA) reported a natural gas storage withdrawal of -230 Bcf, a figure within the analysts’ expectations but well above historic figures. Natural gas in storage is currently at 2.193 Tcf, 437 Bcf below the five-year average figure and 637 Bcf below last year’s level. In one month we experienced a 28.6% drop in storage levels while the five-year average called for a drop of only 22%. Punxsutawney Phil did not have good news for us either. On February 2nd he predicted six more weeks of winter; a brutally cold and long winter so far.
Natural gas storage inventories are now officially below the five-year historical range. We expect the record high withdrawals to continue as long as the current low temperatures continue.
Near-term forecasts are calling for temperatures to remain in the severe cold ranges through at least the middle of February. If we do not get any reprieve from these extreme low temperatures by the end of February we will experience further natural gas pricing spikes, which in turn will push for electric pricing spikes right before the upcoming summer season.
Based on NOAA’s latest extended forecast, we should experience above-normal temperatures across the southern part of the US for the next three months. We can only hope that some of this warmth will find its way up north pressuring pricing for both electric and natural gas lower.
Natural Gas Production & Pricing
Last week, the February 2014 natural gas contract settled at a price of $5.557 per MMBtu, a substantial spike in the pricing trend. The latest monthly settlement was 26% higher than January’s settlement and the highest since January of 2010. The NYMEX Natural Gas price settle curve depicted below includes a polynomial trend line (marked in red) which shows a sustained upward curve. The weather is currently the major factor for the recent price spikes; temperatures through the middle of March could set pricing trends for 2014 and 2015.
Our national dry natural gas production continues to exceed last year’s levels but it did drop to 65 Bcf/day this month due to the extreme temperatures and well-head freeze offs. Once the temperatures settle back to normal levels the output is expected to climb back up to record high territory above 67 Bcf/day.
Even though we had very high increases in the price of natural gas, the market did not experience the expected gas-to-coal switching for power generation because the generators needed both types of fuel due to the very low temperatures. If the current elevated natural gas pricing continues we will eventually see more and more generators ramp up electric generation from lower-cost coal-fired plants.
As of January 30th, 2014 the 12-month average forward pricing curve for natural gas is at $4.44 per MMBtu, compared to last month’s $4.26 per MMBtu price. In addition, the three-month pricing curve for the remaining heating season, February 2014 through March 2014, jumped to $5.01 compared to last month’s $4.37 per MMBtu, illustrating the obvious effect of the much colder-than-average temperatures on market pricing.
With each passing month it becomes more clear that the market possibly experienced its low point in May/June 2012. Several clients took advantage of these positions, but their low-priced contracts are soon up for renewal and they too will experience the market uptrends. However, we did have several clients grab the opportunity last fall tosecure contracts to cover their loads through 2014, with many through 2015.
Current projections estimate the natural gas market returning to $4.00- $4.50 per MMBtu, but we do not expect to see pricing below the $4.00 mark any time soon. If the weather gives us a break, we could see a buying opportunity in the next few weeks.
Natural gas and electric prices are continuing to trade higher than last year. Natural gas production still remains at high levels even though the natural gas rig count has been considerably reduced over the last year. Advances within the shale gas industry have increased production levels to record highs. Current high heating demand and increased industrial demand have contributed to higher pricing. We expect the economy to continue to improve, thus keeping industrial demand strong while the remainder of the heating season could establish the bottom price thresholds for the remainder of 2014.
In December of 2009 New York City Mayor Bloomberg and the City Council signed Local Law 87 (LL87) under the City’s Greener, Greater Buildings Plan. The law requires buildings with gross square footage of 50,000 sq.ft. or more and two or more buildings on the same tax lot that together add up to 100,000 sq.ft. to perform an energy audit and conduct retro-commissioning of the buildings’ base systems such as the envelope, HVAC, controls and lighting.
Under LL87, property owners are required to file an energy audit report during the calendar year of their assignment and every ten years thereafter. The completion assignment schedule is determined based on the last digit of the tax block number assigned to every property in the City. The first rounds of assessments were due for compliance in 2013.
The energy audit must be an ASHRAE level II audit following the strict guidelines established by the Association. It shall be a formal technical assessment of the property’s base systems such as the envelope, mechanical, plumbing, lighting, and control systems resulting in a detailed findings report enumerating energy and water conservation measures with upfront costs and resulting savings.
Retro-commissioning shall apply the commissioning process to existing buildings by identifying underperforming building systems and controls and provide correction solutions to return them to their original and intended performing state. In some cases retro-commissioning performed by qualified professionals can identify and provide solutions for issues that were part of the original design and/or construction.
Property owners and managers that fail to comply with the due dates associated with LL87 shall face fines that accumulate over every non-compliant year. Failure to submit an Energy Efficiency Report will be regarded as a Class 2 violation, which may result in a fine of $3,000 for the first year and, will compound with each additional non-compliant year until the Energy Efficiency Report is submitted. Furthermore, the Department of Buildings will not accept a report if outstanding fines have not been paid.
Contact AUM today for further information and assistance with LL87 and other mandates currently in force across the US. Our experts will evaluate your compliance requirements and schedule the site visit by our Certified Professionals for the completion of the mandate requirements.
We continue to believe that the risk of higher pricing for both natural gas and electric supply outweighs any pricing downturn opportunities. For clients still having exposure to both electric and natural gas market pricing for the upcoming winter months we highly recommend covering their positions for the short term. If all goes well with temperatures, natural gas storage inventories and production, we could see buying opportunities in late February/early March. Clients should highly consider longer positions in the market with 18-, 24- or even 36-month terms.
Natural Gas Storage
Given the current extreme weather gripping most of the Nation, many in our industry are wondering if the high natural gas inventories in storage and the record high dry gas production numbers of the past several weeks offer enough support for the upcoming winter heating demand. A reminder of the upcoming winter season was given to us with the arctic blast engulfing the Eastern two-thirds of the country and the foul weather spoiling travel plans for many Americans. In Chicagoland we are currently experiencing 20-degree daytime temperatures, usual weather for us, but not until late January. Since our last report we have experienced the first withdrawals from the national natural gas storage.
Last week the Energy Information Administration (EIA) reported a low natural gas storage withdrawal of -13 Bcf; a figure within the analyst’s expectations, yet pricing went up. Natural gas in storage is currently at 3.776 Tcf, 17 Bcf above the five year average figure and only 100 Bcf below last year’s record setting levels.
The National Oceanic & Atmospheric Administration, commonly known as NOAA has issued preliminary winter temperature forecasts calling for above normal temperatures for New York, New England and Texas while the Midwest and Midatlantic should expect normal temperatures. Normal temperatures sound like a favorable forecast but we do need to keep in mind that the past two winters registered above normal temperatures.
Natural Gas Production & Pricing
Our national dry natural gas production continues to exceed last year’s levels; we continue on the year- over- year higher production of 2.5 Bcf per day. It appears that the magic price for the coal to natural gas switch made by many electric generators is still at the $4 per MMBtu mark; recent market pricing approaching this threshold will test this theory. In addition coal prices are still at their lowest point over the last three years so the incentive for electric generators to switch to an alternate fuel such as natural gas has diminished.
Last week the December 2013 natural gas contract settled at a price of $3.818 per MMBtu, an uptrend compared to the last four months. The NYMEX Natural Gas price settle curve depicted below includes a polynomial trend line (red line) which shows a sustained upward pricing curve. Despite the above forecast storage inventory reports over the last couple of weeks, the NYMEX forward natural gas futures contracts have not reacted with substantial pricing downtrends. On Cyber Monday, the January gas futures contract settled at $3.988 per MMBtu, approaching the $4.00 psychological mark. For the market to experience a substantial drop with a sustainable duration will require December and possibly January to experience above normal temperatures, for production levels to remain at current record highs and industrial load to remain as is without any major capacity increases.
Currently the 12-month average forward pricing curve for natural gas is at $3.995 per MMBtu, compared to last month’s $3.697 per MMBtu price. In addition the four month pricing curve for the upcoming heating season, December 2013 through March 2014, receded a little to $3.93 from last month’s $3.64 per MMBtu. The effect of the upcoming cold weather on the market pricing is obvious. As stated last month the market appears to be bouncing off a bottom threshold and several buyers have taken advantage of recent lower pricing in order to cover their positions for the upcoming winter loads. Several energy executives continue to project that the natural gas market will continue to fluctuate in the $3.50 to $4.00 per MMBtu range for the first part of 2014.
The fact still remains that natural gas and electric prices continue to trade higher than a year ago. Natural gas production is at an all-time high even though the natural gas rig count has reduced by 13% compared to last year. Advances within the shale gas industry have increased production levels to record highs. We continue to have minimal demand and the record high production levels are keeping energy pricing in check. Both the natural gas and electric pricing are currently trading near their second-lowest levels in the last decade. Hurricane activity was non-existent this season but the winter heating season of 2013-2014 is just starting.