The past several weeks has seen gas prices run up, however we did see some relieve after Thursday’s storage report, a decline that continued Friday, for the week ending September 6th..
I have not posted before on the impact of the US Energy Information Administration (“EIA”) storage numbers that come out every Thursday at 10:30 am eastern time, and more often than not has an immediate impact on the market be that up or down. The EIA reports the amount of natural gas storage in the US system each week, and is a measure of the amount of gas supply that is able to meet the demands of consumers across the US. Analysts make their estimates of what that storage number will be. When the actual figures come in, the market reacts to those storage levels being over or under the market expectations, largely determined by those same analyst estimates. The inventory levels of gas are measured in billion cubic feet (“Bcf”). The levels are always reported as of the prior week’s storage levels. The data reported on 9/5/2013 showed 3,188 Bcf, up 58 Bcf from the previous week, or up 2%. The prior year’s report ending the same week showed 3,398 Bcf in the system, so the levels have come down 7% vs the comparable period a year ago. The being said, present gas in the system is at around the 5 year average of 3,145 Bcf.
Political turmoil in the Middle East, threat of the US going to war, and the active period of the hurricane season can all lead to volatility in the coming months. Winter season and colder weather also presents a risk of increased volatility in the power and gas markets. Those customers looking for price protection should elect to lock their rates with a 6 month fixed price product. Those customers seeking the flexibility of short term contracts, and being able to participate in the benefits of lower index pricing should elect to go with a variable price product.