Natural Gas Storage Deficit Largest Since May 2015; 2016 Warmest Year on Record
- Jan 20, 2017
New York, NY – Natural gas closed Thursday at $3.368/MMBtu after a large draw from natural gas storage (243 bcf), bringing stockpiles 2.6% below the 5-year average (its largest deficit since May 2015). The surplus was just 54.4% above the 5-year average this past April, indicating a shift in supply and demand over the past half year. According to Platts, production is down 2.4 bcf from the same period last year, primarily due to record low active drilling rigs as a response to the record low pricing we reached in 2016. Combined with high volumes of Mexican exports we discussed in last week’s update, plus growing LNG exports and power generation demand, natural gas supply and demand is tighter than we’ve seen in quite some time. Should we see a cold snap this winter, expect spot gas and power pricing to rise as we draw down more and more gas from storage.
2016 – Warmest Year On Record
Both NOAA and NASA have separately declared 2016 the warmest year on record. This makes it the third year in a row that temperatures have been at an all-time high. The average surface temperatures were 0.07 degrees Fahrenheit higher than 2015 and January through August were each individually the warmest months since the National Oceanic and Atmospheric Administration (NOAA) began recording back in 1880. NASA found an increase of 0.22 degrees Fahrenheit since 2015 and noted that 16 of the 17 warmest years on record have transpired since 2001.
Scientist are undoubtedly blaming the increase in temperature on humans. “The pattern of record warmth in the lower atmosphere, coupled with record cold in the stratosphere, provides a clear fingerprint of the cause of the unprecedented warming- greenhouse gases trapping heat in the lower atmosphere instead of letting it escape to the stratosphere, and then to space. No doubt about it anymore- humans, mainly by burning fossil fuels, are cooking the planet,” says Jonathan Overpeck, a climate scientist at the University of Arizona. To make matters even worse, the Arctic is warming two to three times quicker than the global mean. The Arctic sea ice extended for 3.92 million square miles in 2016, which is the smallest since NOAA recording began in 1979. This is all unfolding just in time for Trump’s Presidency, who has tweeted that global warming is a “hoax,” but his nominee for the Environmental Protection Agency (EPA) has finally accepted that human activities contribute to the changing of the climate.
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