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Sunday, 14 April 2019 15:00

GAS STORAGE INVENTORIES CONTINUE TO GROW AND WARMER WEATHER CONDITIONS ADD STABILITY TO THE WHOLESALE AND RETAIL POWER AND GAS MARKETS.

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The natural gas (Henry Hub) prompt month contract ended the week unchanged from prior, settling at $2.66 / MMBtu.  The 12, 24, and 36-month contracts were also unchanged, settling at $2.85; $2.79; and $2.75 / MMBtu respectively.  Keep in mind that the above gas prices are for the benchmark Henry Hub Index.  Several conditions can add significant volatility to your local power and gas markets, weather being the biggest one.  While wholesale power and gas markets are stable, there are still significant benefits to rate locking power and gas retail supply contracts.  Allow your ESCO supply company to work for your service, and manage market volatility with fixed price contracts.  Variable rate contracts do not offer price protection (or value) in my own humble opinion.

New gas storage levels came out on April 11, 2019 for the week ending April5, 2019. The overall storage level ended the week at 1,155 / MMBtu, a much-needed increase in the system of 25 MMBtu.  Natural gas storage levels are 29.6% below the 5-year average, and 13.7% below where they were 12 months ago.  Keep in mind that this is storage in the system.  As you can see from the charts, the storage levels are markedly below historical averages, but there are still ample supplies of natural gas in the ground that has yet to be tapped by producers. 

Variable rate plans are meant to be pegged to an index (keep these market movements in mind when evaluating comparable billing periods!). While pass through components such as capacity and ancillary services costs have come up, the commodity itself remains in check.  The low-price environment continues to present a great opportunity for commercial and residential customers to lock in power and gas rate plans for the next 12-month period and beyond.

Attractive opportunities are in the market for customers to hedge out price volatility.  Keep the risk where it belongs, with your well-seasoned energy supply partner.

Shoulder season continues, where much needed weekly injections into the natural gas storage system can be expected.  Storage levels are low.  This should cause concern to everyone on variable rate power and gas supply plans leading into the summer volatility season.

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