The natural gas futures market saw spot prices trend slightly up, with longer dated contracts off slightly from the prior week. The prompt month natural gas contract settled at $2.20 / MMBtu. The 12, 24, and 36-month contracts settled at $2.34; $2.38; and $2.40 / MMBtu respectively. There is still great value in rate locking your power and gas supply with fixed price term contracts. 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 opinion.
New gas storage levels came out on August 15, 2019 for the week ending August 9, 2019. The overall storage level ended the week at 2,738 / MMBtu, a modest increase in the system of 49 MMBtu. Natural gas storage levels are 3.9.% below the 5-year average, and 15.0% above 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 below historical averages, but there are still ample supplies of natural gas in the ground that has yet to be tapped by producers. As we approach the hi gas demand winter season, keep an eye on the relatively low gas storage inventory levels.
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. As a customer, you have the choice to decide who holds the price volatility risk. Protect yourselves with fixed price contracts. Those customers who elect a variable rate plan are 100% exposed to price volatility driven by weather and other market conditions. Allow your supply company to do their job and manage the volatility by offering you a fixed price contract.
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.
Weekly changes in cooling degree days continue to show that the markets are experiencing hi summer temperatures which lead to market volatility risk. All cities we track are seeing above average weekly temperatures. Weather continues to be the most significant risk to all customers who have chosen not to hedge power and gas price volatility with fixed price contracts. Great time to rate-lock power and gas supply for retail customers. When cooling degree days go up, natural gas demand goes up. When there is not enough gas in your local market, bad things happen to customers on variable price power and gas contracts.
Hurricane season is upon us and has the potential to bring regional devastation and additional power and gas price volatility. The Atlantic coast is currently inactive but things change all the time. The best hedge continues to be a fixed price power and gas products for residential and commercial customers in deregulated markets.