Increasing natural gas demand from power generation in the U.S. Northeast may lift New York prices in the short term

Wednesday, March 28, 2012

BENTEK’s Northeast Market Call reports that total Northeast gas demand from power generation is up 0.5 Bcf/d or 13% month-to-date compared to 2011, despite fewer regional heating degree days. This increase is partly being driven by continued fuel displacement as gas-fired generation gains market share over coal. As a result, the Northeast Market Call forecasts Transco Zone 6 New York cash basis will average $0.31 through this summer, while the forward curve is currently trading at $0.20. This suggests that Transco Zone 6 may be currently undervalued. However, the forward curve is still lower than last summer’s average of $0.41, which occurred during the hottest summer of the past 60 years. Higher Northeast gas demand from power has the potential to support prices in capacity-constrained markets like New York City, despite growing Northeast natural gas production and record-high storage levels.

BENTEK’s Northeast Market Call provides the crucial insight needed to make forward-looking decisions on the Northeast natural gas market. This monthly report offers a comprehensive and forward-looking view of Northeast basis through a sector-by-sector analysis of the underlying factors that drive the Northeast market, including production, storage and demand.

Key features of BENTEK’s Northeast Market Call:

• Three-year seasonal forecast for Northeast natural gas supply, demand and storage
• Basis forecasts through 2014 and analysis for the following markets:
         - Transco Z6 (New York and non-New York)
         - TCO Appalachia
         - Dominion South
         - TETCO M3
         - TGP Z6
         - Algonquin Citygate
         - Iroquois Z2
• Northeast expansions and maintenance analysis


BENTEK’s Taming the Beast Market Alert provides a detailed examination of Northeast supply and demand growth over the next five years, including the potential for pushback to other regions or LNG exports. This Market Alert includes the power and production forecasts used in BENTEK’s Northeast Market Call.

To learn more, please contact your BENTEK sales representative or call BENTEK Sales at 1-888-251-1264.