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Matterhorn Energy provides natural gas fundamental analytic services to trading and commercial organizations.
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  • Matterhorn Energy Natural Gas Storage Forecast +34 BCF (UNG, GAZ)

    The Matterhorn Energy Weekly EIA Natural Gas Storage Forecast for gas week 4/12/12 is +34 BCF.

    Last week's +18 BCF (adjusted for the reclassifications) came in at 5.25 BCF/d tight to our 2011 model, as the market's balances reverted to the range of the 4 week average. This week, however, we see significant loosening in balances with our +34 BCF forecast. If the EIA prints a number in line with our expectations, we would see the market as loosening 3.25 BCF/d on a week over week basis.

    Our forecast of +34 BCF this week comes primarily from our scrape models, and is qualitatively defended by the recent observations in HDDs not proving to generate any significant heating demand. While our demand model came in at +21 after our adjustments for the lessening Residential/Commercial sector demand, we still believe the model is over-estimating the demand from the residual HDDs as this outright bearish winter came to a close.

    COAL SWITCH SETS A NEW HIGH

    The reference week set a new 7 day weather adjusted power burn record against our 2011 baseline. While coming in nominally lower than the previous week, burns were about 0.25 BCF/d stronger on a weather adjusted basis than the prior week.

    (click to enlarge)

    As the market waits for summer weather to show up, our forecast and actual burns continue to climb. We anticipate burns will continue to pickup strength as overnight loads allow for it.

    Below is our assessment of where current coal to gas economics predict nuclear adjusted switching should be on a rolling two week basis.

    (click to enlarge)

    The red dotted line is our model prediction. Orange bars are actual switch.

    WEEKLY US DRY GAS PRODUCTION ASSESSMENT

    US Dry Gas Production during gas week 4/12/12 increased approximately 0.75 BCF/d to average 64.59 BCF/d.

    April to date our US Dry Gas Production index comes in at 64.34 BCF/d versus the final March level of 63.85 BCF/d and April 2011 at 62.28 BCF/d.

    Growth continues to be led by gains in the Marcellus Shale.

    (click to enlarge)

    EARLY LOOK FORECASTS

    As of today, the Matterhorn Energy Demand Model sees the following going forward:

    (click to enlarge)

    Apr 17 12:29 AM | Link | 1 Comment
  • EIA Natural Gas Storage Forecast +21 BCF - UNG

    The Matterhorn Energy Weekly EIA Natural Gas Storage Forecast for gas week 4/5/12 is +21 BCF.

    If the EIA reports in line with our expectations this week, we would view the market as reverting to the range of 4.75-5.00 BCF/d tight to our 2011 baseline. Last week's +42 BCF came in at 2.25 BCF/d tight to our 2011 model, and we view that week over week loosening to be driven by a lack of heating demand as the end of the heating season, for all intents and purposes, came to a close.

    Our forecast of +21 BCF this week is a combination of our scrape forecasts and our demand model. We modeled heating demand at +0.75 BCF/d week to week as our national sample picked up 2 HDDs. Roughly speaking, our model typically assigns 1 BCF/d to each national HDD, so the adjustment we made from last week's demand miss is evident. The remainder of the week to week tightening came from a reduction in US Dry Gas Production and a large increase (+1.75 BCF/d) in gas fired power generation.

    COAL TO GAS SWITCHING JUMPS

    (click to enlarge)

    The reference week saw an increase of almost 0.70 BCF/d of coal to gas switching, adjusted for nuclear generation outages. The increase in switching over the past three weeks has been impressive, but follows a large move in the economic spread between coal unit economics and the equivalent natural gas unit.

    As mentioned several weeks ago, we saw a large disconnection between what our economic model told us the coal to gas switch should be, and what our realized power burns were showing as actually being run. We expect to see a continued in-crease in coal to gas switching as generation demand begins to pickup with cooling degree day registers in the Gulf and Southeast as the current queue of natural gas fired plants in dispatch get called upon.

    Below is our assessment of where current coal to gas economics predict nuclear adjusted switching should be on a rolling two week basis. As the nuclear outage season comes to a close in early May, we expect this expected switch to jump by almost 1 BCF/d.

    The red dotted line is our model prediction. Orange bars are actual switch.

    (click to enlarge)

    EARLY LOOK FORECASTS

    As of 4/9/12, the Matterhorn Energy Demand Model sees the following going forward:

    (click to enlarge)

    Apr 11 3:17 AM | Link | 1 Comment
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