2004/05 winter energy market assessment
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2004/05 Winter Energy Market Assessment. November 18, 2004. Federal Energy Regulatory Commission • Office of Market Oversight and Investigations - PowerPoint PPT PresentationTRANSCRIPT
2004/05 Winter Energy Market Assessment
November 18, 2004
Federal Energy Regulatory Commission • Office of Market Oversight and InvestigationsDisclaimer: This Report contains analyses, presentations and conclusions that may be based on or derived from the data sources cited,
but do not necessarily reflect the positions or recommendations of the data providers.
OMOI’s Winter Assessment:Market’s behavior is consistent
with commodity markets under tight conditions
• Supply Adequacy• Status of Trading
• Infrastructure• Electric Markets
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
1/1/04 2/1/04 3/1/04 4/1/04 5/1/04 6/1/04 7/1/04 8/1/04 9/1/04 10/1/04 11/1/04
Pric
e ($
/MM
Btu
)
Henry Hub Nov04-Mar05 Winter Strip
Henry Hub Prompt Month Futures Price
Henry Hub Spot Prices on ICE
Uncertainty and Supply Tightness Appear to be Driving Markets
Henry Hub Prompt Month Futures Price
Henry Hub Nov04-Mar05 Winter Strip
Henry Hub Spot Prices on ICE
16.5
17
17.5
18
18.5
19
19.5
20
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
ly D
ry G
as P
rodu
ctio
n (T
cf)
0
200
400
600
800
1000
1200
Ave
rage
Yea
rly G
as R
ig C
ount
ProductionEIA
Rig Count
Estimated total 2004 Production 18.18 Tcf- CERA
Estimated total 2004Production - 18.72 TcfLehman Bros
18.87 TcfEstimated
How has the supply and demand balance changed since
last winter? Weather is key.
Year-on-Year ChangeWeather Scenarios
Prod.
Expected Winter
Demand
10% Colder Demand
10% Warmer Demand
Net Pipeline Imports
LNG
Storage
Total Supply
-0.60-0.40-0.200.000.200.400.600.80
1
(Tcf
)Year-on-Year Change Weather Scenarios
Year-on-Year ChangePessimistic Supply
Prod.
Expected Winter
Demand
10% Colder Demand
10% Warmer Demand
Net Pipeline Imports
LNG
Storage
Total Supply
-0.60-0.40-0.200.000.200.400.600.80
1
(Tcf
)Year-on-Year Change Pessimistic Supply
$0
$2
$4
$6
$8
$10
$12
$14
1/1/2003 3/1/2003 5/1/2003 7/1/2003 9/1/2003 11/1/2003 1/1/2004 3/1/2004 5/1/2004 7/1/2004 9/1/2004 11/1/2004
New
Yor
k D
eliv
ered
Ene
rgy
Pric
es ($
/MM
Btu
)Natural Gas New York
No 6. Fuel Oil
No 2. Fuel Oil
Crude Oil
Alternative Fuel Prices Have Moved Farther and Faster than Natural Gas
Natural GasNew York
No. 6Fuel OilCrude Oil
No. 2Fuel Oil
0
500
1,000
1,500
2,000
2,500
3,000
Ope
n In
tere
st (M
illio
ns o
f MM
Btu
's)
Short Commercial Position
Long Commercial Position
Short Non-Commercial Position
Long Non-Commercial Position
Speculative Trading Appears Less Significant
Than Supply and Demand Conditions
Short Commercial Position
Long Commercial Position
Long Non-Commercial Position
Short Non-Commercial Position
Regional Markets, Especially the NE,
Could See Price Increases With Severe Weather
Pipeline Capacity Use during Peak Conditions on January 14, 2004
Reflected a Variety of System Factors
Iroquois 73%
Maritimes 75%
Tennessee 95%
Algonquin 99%Texas Eastern
92%
Transco 94%
NY ISONY ISO
ISO NEISO NE
Portland 89%
Electricity Prices Are Rising
in Response to Fuel Cost Increases
FERC’s OMOI Will Continue to Monitor Market Drivers Closely This Winter
• Work with public utility commissions to help them protect customers as prices flow from the wholesale to retail markets
• Monitor gas market activity including pipeline capacity utilization and regional prices
• Assess status, quality of and market reaction to natural gas storage data
• Monitor winter electric market behavior
• Pay particular attention to unexplained price movements and market activity around extreme weather