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Items filtered by date: January 2021

Sunday, 10 January 2021 01:39

THE POLAR VORTEX MAY BE ON ITS WAY

RATE LOCK NOW, YOU DO NOT WANT TO BE ON THE WRONG SIDE OF POWER AND NATURAL GAS VOLATILITY CURVES.  WEATHER AND THE EFFECT IT HAS ON COMMODITY PRICES IS WELL DOCUMENTED, AND NOT SOMETHING YOU WANT TO HAVE EXPOSURE TO.

Polar Vortex is defined as a persistent, large-scale, upper-level low-pressure area, less than 1,000 kilometers in diameter, that rotates counter-clockwise at the North Pole and clockwise at the South Pole, i.e., both polar vortices rotate eastward around the poles. The vortices weaken and strengthen from year to year.  It is not uncommon to the market volatility caused by such an event take down and bankrupt an energy supply company.  If a customer is on a variable rate power or gas supply plan, they expose themselves to the same level of risk.

Welcome to the first week of trading in 2021!  The prompt month contract was up 6.3% for the week, settling at $2.70 / MMBtu.  The 12, 24, and 36-month contracts were also up, settling at $2.81; $2.71; and $2.64 / MMBtu respectively.  Covid 19 continues to crush demand for both power and natural gas.  This is for the liquid Henry Hub delivery point.  The forward natural gas curve signifies a great time to lock in your retail power and gas prices for longer stretches of time.  Spreads between the short term and long-term natural gas contracts are compelling and continue to support the decision of locking your power and gas rates for longer stretches of time.  Allow your ESCO supply company to work for your business or residence, and manage market volatility with fixed price contracts for term length.  Variable rate contracts do not offer price protection (or value) in my own opinion.

New gas storage levels came out on January 7, 2021 for the week ending January 1, 2021.  The overall storage level ended the week at 3,330 / MMBtu, a big cold weather driven decrease in the system of 130 MMBtu.  Natural gas storage levels are 6.4% above the 5-year average, and 4.3% above where they were 12 months ago.  Keep in mind that this is storage in the system.  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 that are not necessary tied to the prompt month gas trading levels (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.  This is not a risk that customers should be exposed to.

We are now tracking the heating degree days for some of the larger deregulated retail supply markets.  Heating degree days are a great indicator of demand for natural gas moving inter the cold winter season.  See our bar charts to track your specific location.

Published in Industry News

Short trading week with the New Year’s holiday was relatively flat with the prompt month settling at $2.54 / MMBtu.  The 12, 24, and 36-month contracts settled at $2.69; $2.63; and $2.57 / MMBtu respectively.  Covid 19 continues to crush demand for both power and natural gas.  This is for the liquid Henry Hub delivery point.  The forward natural gas curve signifies a great time to lock in your retail power and gas prices for longer stretches of time.  Spreads between the short term and long-term natural gas contracts are compelling and continue to support the decision of locking your power and gas rates for longer stretches of time.  Allow your ESCO supply company to work for your business or residence, and manage market volatility with fixed price contracts for term length.  Variable rate contracts do not offer price protection (or value) in my own opinion.

New gas storage levels came out on December 31, 2020 for the week ending December 25, 2020.  The overall storage level ended the week at 3,460 / MMBtu, a big cold weather driven decrease in the system of 114 MMBtu.  Natural gas storage levels are 6.3% above the 5-year average, and 7.8% above where they were 12 months ago.  Keep in mind that this is storage in the system.  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 that are not necessary tied to the prompt month gas trading levels (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.  This is not a risk that customers should be exposed to.

We are now tracking the heating degree days for some of the larger deregulated retail supply markets.  Heating degree days are a great indicator of demand for natural gas moving inter the cold winter season.  See our bar charts to track your specific location.

Published in Industry News

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