MISO Natural Gas Demand Struggles, as Total Demand Also Struggles

Total load in MISO this month remains anemic.  The lowest loads of the year, and the lowest April average load in many years, is holding down fossil fuel potential.  So far this month, there has not been a single day with load above the April 2016 monthly average!

With gas also losing market share to coal on price, usage of this hydrocarbon is down about 15% MTD. 

Natural Gas Inventory Builds Too Much

Today's natural gas inventory build of +54 BCF was above expectations, but gas didn't sell off too much, just down 2-4 cents.  

Inventories are high, but production has been stubbornly low.  Everyone is awaiting an expected surge in output, but projections continue to be revised lower, or rather 'later'.  

Exports have been price supportive, and imports from Canada, though high, are at the expense of Canadian storage inventories so it can't go on indefinitely.  

Losses of power burn market share to coal have been in line with consensus expectations, on the order of 3 BCFD so far this shoulder season.  Gas demand has been severely hurt by western hydro output, but helped by nuclear outages, both of which should persist for months (hydro more so).  

Natural Gas Storage VS Average

Here's another perspective on natural gas storage.  This is the relationship to the 5 year storage average.  Last year on this date, we were at the 5 year max, 679 BCF above the average.  This year, the anomaly has risen to 263 BCF from zero at Jan 1.

The grey region is the 5 year min-max deviation, which is revealing in that it shows how well the supply-demand balance guides inventories toward equilibrium by the end of injection season in November:

Alberta Gas Production Rises in April, Averaging 0.2 BCFD Above April '16.

Whether seasonal factors and timing, or a fundamental shift is taking place, TC Nova pipeline receipts in April are up from Feb and March, and are now above 2016 levels.

Output normally declines in May, and we will soon see whether the same pattern prevails in 2017.  If the higher rig counts are translating into more molecules, it could reverse the inventory trend we have seen since January:

Southern Power Pool: Natural Gas Market Share Declines in April (vs April 2016)

In SPP, a few bad things are happening for natural gas.  Total demand for carbon fueled power generation is down by about 2GW in April, and gas has lost market share to coal, from around 36-40% of thermal output last year, to 27-31% of thermal output this year.

The two primary culprits are (1) increased wind output and (2) higher natural gas prices.


Here are the poly lines for April '16 and '17, showing market share for natural gas:

The daily demand for carbon fueled power, with a 30-average line, for 2016 and 2017: