The natural gas futures market saw spot prices shift to October and trend up for the week, with longer dated contracts up slightly from the prior week as well. The prompt month natural gas contract settled at $2.29 / MMBtu. The 12, 24, and 36-month contracts settled at $2.38; $2.41; and $2.44 / MMBtu respectively. The curve is tight, so why not take advantage of longer dated retail power and gas supply options. Take risk off the table with the low spread environment. Allow your ESCO supply company to work for your business or residence, 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 29, 2019 for the week ending August 23, 2019. The overall storage level ended the week at 2,857 / MMBtu, an increase in the system of 60 MMBtu. Natural gas storage levels are 3.4% below the 5-year average, and 14.6% 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.
While unlikely to cause market price volatility, Hurricane Dorian is now a category 4 story with 150 mph winds. Significant danger and destruction are projected for the Bahamas, and eastern US states of Fla, GA, SC, and NC. Please be prepared and stay safe.