This week’s gas market started down and trended back up after Thursday’s storage report. Weather was a non factor, however anticipate the north east to experience colder temperatures as we get into the winter season. This will cause a kink in the demand curve, with natural gas being the heating source for many residential and business furnaces. The prompt month was up $0.05 cents for the week. Spreads between the 12, 24, and 36 month strips were consistent at 3% and 5%. Prices are well off from when the $4.00 level had been breached, closing in the $3.66 to $3.87 for the 12, 24, and 36 month strips.
New gas storage levels came out on November 7, for the week ending November 1. The data showed 3,814 Bcf of gas in the system, up 35 Bcf from the previous week, or up 1%. The prior year’s report ending the same week showed 3,926 Bcf in the system, so the levels have come down 2.8% vs. the comparable period a year ago. That being said, present gas in the system is at around the 5 year average of 3,757 Bcf.
Many customers will be shopping this week to lock their Cal 13 price for power and gas. Given the low volatility seen in the markets, customers may still choose to float their rate with a variable product, and assume the risk of upward trending prices in order to take advantage of market downturns. Cold weather continues to be the biggest risk component for this group of customers by leading to increased demand of natural gas in order to heat their residences and businesses.