This week had more down days than up days for the natural gas futures market. The week ended with the 12, 24, and 36 month strips all off around 2% from the prior week’s close. Continued dysfunction in Washington does not appear to be having an effect on the market. Weather has largely been in check; however Tropical Storm Karen continues to circulate in the Gulf of Mexico. Based on the current path, states open for Choice should be largely unaffected. The battle of the debt ceiling is an event that has the potential of causing the most volatility in power and gas markets, so customers should monitor those events and choose whether or not to lock their rates accordingly. The markets continue to test the $4.00 level, but again falling short of it. Spreads between the 12, 24, and 36 month strips were unchanged from last week.
New gas storage levels came out on October 3, for the week ending September 27. The data showed 3,487 Bcf of gas in the system, up 101 Bcf from the previous week, or up 3%. The prior year’s report ending the same week showed 3,642 Bcf in the system, so the levels have come down 4.5% vs. the comparable period a year ago. That being said, present gas in the system is at around the 5 year average of 3,438 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.