On Saturday, May 5, team member Chris Griffin was killed in a tragic auto accident. Chris spent more than a decade with our team, at North American Energy Advisory and with the newly-formed Energy Professionals. Over the years he matured from a hesitant customer service rep to a confident, knowledgable and trusted energy advisor to his clients. Most of all, he was a beloved and integral part of our team. Not only was he one of my top Energy Consultants, he was also one of my best friends. He is greatly missed. The following is a remembrance from Energy Professionals President, Jim Mathers.

You have spent over 24,960 hours with us and that was just not enough time.
We feel grief and we feel the grief of all your friends and family members.
Over the past 12 years, you were not just a co-worker or an employee. You were and will always be family to us too.
We will miss you, NOT because of your stellar production year after year. We will miss you because of your winks, your smile, your loyalty, your advice, your care, your great attitude, your quiet way of getting things done, your wild and funny comments and your willingness to always help.
We love you Chris and we all miss you.
Your family always and forever,

North American Energy Advisory & Energy Professionals, LLC

PS- You were and always will be the only person allowed to call the ladies “sugar” and get away with it.

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(My reports focus on Natural Gas as it is the largest energy source for the generation of Electricity; therefore, Natural Gas and Electricity are highly correlated.)

In my April 23rd Energy Update, I said the winter draw of supplies normally ends by March 31st and the injection season (building supplies for the next winter heating season) runs from April 1st thru Oct 30th. But this year we experienced cool weather well into April, which increased heating demand for Natural Gas and supplies declined into late April, which is unprecedented.

I pointed out as of Apr 20th, there were 28 weeks remaining in the injection season ending Friday, Nov 2nd. and supplies were approximately 519 Bcf below the 5-Yr. Avg.; therefore, Natural Gas supplies needed to increase weekly approximately 18.5 Bcf more than the 5-Yr. Avg. over the following 28 weeks to return to the 5-Yr. Avg.

In today’s report, I summarize the progress of rebuilding of supplies, and how the continued delay in building supplies may affect Natural Gas and Electricity prices.

After experiencing cooler than normal weather in April that increased heating demand for Natural Gas, we are now experiencing warmer than normal weather in May, which is increasing cooling demand and inhibiting the rebuilding of supplies.

Below is NOAA’s 8 to 14 Day Outlook thru May 30th:

If NOAA’s forecast is correct, as of June 1st, Natural Gas supplies will remain nearly 519 Bcf below the 5-Yr. Avg. Therefore, Natural Gas supplies will now need to increase weekly 23.6 Bcf more than the 5-Yr. Avg. over the next 22 weeks to return to the 5-Yr. Avg. by Nov 2nd

The delay in building suppliers faster than the 5 Yr. Avg is making it more difficult for Natural Gas supplies to return to the 5 Yr. Avg during this year’s injection season, which is increasing the risk of higher prices, and a warmer than normal summer will result in a significant shortfall of Natural Gas supplies prior to this year’s winter heating season, which will likely lead to much higher Natural Gas and Electricity prices.

 Conclusions:

No one can absolutely predict the future, but as seen in the chart below over the last 18 years rates were higher than present levels nearly 95% of the time, and with supplies far below the 5 Yr. Avg., hedgers will be wise to secure rates near historical lows:

 

Securing Natural Gas and Electricity at present levels will assure hedgers budget certainty at a low cost for long-term planning in one of their major cost centers.

Not every client’s risk tolerance and hedging strategy is the same, but we trust the above report will help you put into perspective the risk/reward opportunities now. I invite you to call one of our energy analysts to help you plan a hedging strategy appropriate for your situation.

Ray Franklin
North American Energy Advisory
Senior Commodity Analyst

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(My reports focus on Natural Gas as it is the largest energy source for the generation of Electricity; therefore, Natural Gas and Electricity are highly correlated.)

In my April 23rd Energy Update, I documented the present supply levels of Natural Gas and explained why the delay in building supplies increases the risk of higher prices during this year’s injection season.

Normally the winter draw of supplies is completed by the end of March and the injection season (building supplies for the next winter heating season) runs from April thru Oct. But this year we experienced colder than normal weather in April, which increased heating demand for Natural Gas and supplies declined into late April, which is unprecedented.

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The North American Energy Advisory recently merged with Energy Professionals to form one of the largest Energy Consulting Firms in North America combining 2 firms with proven track records, which have been chosen by Exxon Mobil, Fastenal, Johns Hopkins, National Vision and the City of East St. Louis as one of their energy consultants.

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(My reports focus on Natural Gas as it is the largest energy source for the generation of Electricity; therefore, Natural Gas and Electricity are highly correlated.)

In my April 2nd Energy Update, I discussed the ramifications of cooler than normal weather continuing into mid-April, which further tightened supplies. In today’s update, I discuss the present state of Natural Gas supplies and explain why the delay in building supplies increases the risk of higher prices during this year’s injection season.

Normally the winter draw of supplies ends by the end of March and the injection season (building supplies for the next winter heating season) runs from April 1st thru Oct 30th. But this year we experienced cool weather well into April, thereby increasing heating demand for Natural Gas and supplies continued to decline into late April, which is unprecedented.

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(My reports focus on Natural Gas as it is the largest energy source for the generation of Electricity; therefore, Natural Gas and Electricity are highly correlated.)

In my Mar 12th Energy Update, I said the average temperature in March would be cooler than normal, and supplies would end the winter heating season at the upper end of the previously estimated 15% to 20% range below the 5 Yr. Avg. In today’s report, I discuss the ramifications of cooler than normal weather continuing into the middle of April, which further tightened supplies, and why a Natural Gas rally has been delayed.

Normally the winter draw of supplies ends by the end of March and the injection season (building supplies for the next winter heating season) runs from April 1st thru Oct 30th. But this year very mild weather in March continued into the first half of April, thereby increasing heating demand for Natural Gas and the supply situation worsened. Every Thursday, the EIA, reports the amount of Natural Gas in storage as of the previous Friday.

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(My reports focus on Natural Gas as it is the largest energy source for the generation of Electricity; therefore, Natural Gas and Electricity are highly correlated.)

In my Feb 19th & Feb 26th Energy Updates, I point out since 6/9/16, we held above key support near $2.50 per MMbtu and would likely end the winter heating season with supplies 15% to 20% below the 5 Yr. Avg. I said anytime you can purchase a commodity near the lower end of its long-term trading range with supplies significantly below the 5 Yr. Avg., it was prudent to do so, and in today’s report, based on recent data, I will reiterate the same point.

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(My reports focus on Natural Gas as it is the largest energy source for the generation of Electricity; therefore, Natural Gas and Electricity are highly correlated.)

In my Feb 19th Energy Update, I said when a market holds key support in the face of negative news it is signalling the path of least resistence is for higher prices.Therefore, I continue to believe, Natural Gas and Electrcity are buying opportunities near present price levels. The key support level I referred to is near $2.50 per MMbtu, and Natural Gas has held above this key support level since 6/9/16:

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(My reports focus on Natural Gas as it is the largest energy source for the generation of Electricity; therefore, Natural Gas and Electricity are highly correlated.)

In my Feb 5th Energy Update, I said when supplies are tight, prices often react violently to unexpected changes in weather forecasts, leading to high volitility and overreactions. Therefore, I felt with Natural Gas approaching the lower end of the trading range in place since June 2016, NOAA’s unexpected change in their 8-14 day forecast was a potential buying opportunity for hedgers.

Over the last 2 weeks, the news for Natural Gas continued to be very negative, with NOAA unexpectely forcasting warmer than normal weather for much of the United States till the end of February, which substantially decreased heating demand. Last week after NOAA changed their forcaste, I thought Natural Gas would likely break below key support near $2.50 per MMbtu, but as you can see in the chart below, prices remained within the trading range in place since June 2016:

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(My reports focus on Natural Gas as it is the largest energy source for the generation of Electricity; therefore, Natural Gas and Electricity are highly correlated.)

In my Jan 29th Energy Update, I said weather will be the most important factor influencing Natural Gas and Electricity pricing over the next 2 months, and with Natural Gas supplies far below normal, short-term declines should be considered buying opportunities. I pointed out we were experiencing a “January Thaw” throughout much of the United States, which would decrease heating demand, but NOAA was forecasting colder than normal weather would return soon and the draw of Natural Gas supplies was expected to again be above normal.

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