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Saturday, 14 September 2013 14:30

GAS PRICES

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For week ending Sept 13 the gas market was flat relative to the week prior.  Spreads between the 12, 24, and 36 month terms were unchanged, so there does not appear to be an advantage to locking in rates greater than 12 months.  When the spreads get tighter, it is an indication of low inflation, and an opportunity to go longer when locking in your fixed price.  As spreads become wider, it is a reflection of increased volatility, which usually translates in a premium the longer you elect to lock your rate.  The possibility of US military involvement in the Middle East continues to exist causing some market uncertainty, however a weak hurricane season and cooler fall temperatures add to low levels of market volatility.

New gas storage levels came out on Sept 12 for the week ending Sept 6. The data showed 3,253 Bcf of gas in the system, up 65 Bcf from the previous week, or up 2%.  The prior year’s report ending the same week showed 3,425 Bcf in the system, so the levels have come down 5% vs the comparable period a year ago.  The being said, present gas in the system is at around the 5 year average of 3,207 Bcf.

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. 

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