Natural Gas Storage
Normal Storage Withdrawal Drives Price Down
This past week, EIA reported natural gas withdrawal of 152 Bcf from storage. Current storage levels represent a 20% increase over last year and 18% above the 5-year average. After the storage report release, gas prices dropped 6.6¢ and settled under the $2.00 threshold.
Weather and gas storage are the primary drivers in natural gas prices at this time of year. With mild temperatures and high storage levels, prices have dropped below the $2.00 level. That’s great news if you’re looking to lock into long-term energy rates.
Weather Forecast: More Above Average Temperatures Across All Northern States
The National Oceanic and Atmospheric Administration continues to predict above average temperatures for all northern and western states for the remainder of winter. Some below normal temperatures are expected in parts of the southern and southeastern states.
Last month, traders showed concerns over possible low January temperatures as the key factor in determining energy prices for the remaining winter season and into the spring. January brought some heavy snow, but temperatures remained as predicted; resulting in normal storage withdrawals. Continued above average temperatures should bode well for prices through the remainder of winter and into spring. Look towards low electric prices this summer if this temperature trend continues.
Natural GasPrices Continue to Stay Low and Dip Even Lower
Daily prices are buoying at the $2.00/MMBtu level; a significant market barrier. As you can see from the NYMEX chart below, we haven’t seen prices as low as these in many years. With warmer than normal temperatures, production near all-time highs, and storage at 5-year highs, prices look to remain low and possibly drop further. Technical trading indicators point to prices being below the $2.00 threshold.
Futures prices saw March drop 6.6¢ to $1.972 and April down 6.1¢ to $2.062 after the storage report. Similarly, Marchcrude oil dropped 56¢ to $31.72 / bbl. Some analysts are predicting natural gas prices to dip to between $1.75 and $1.96 / MMBTU.
Physical prices at major trading hubs likewise followed the market, with losses of a few pennies. Gas at the Henry Hub dipped a penny to $2.05, and deliveries at the Chicago Citygate dropped a penny lower at $2.06. Gas at Opal fell 5 cents to $1.96 and contracts at PG&E Citygate were quoted 5¢ lower at $2.22.
Now is a great time to lock in long-term natural gas.
Natural Gas PricesRemain Low - Pull the Trigger Now if You Like Low Fixed Prices
The winter is looking to be a mild one. Temperatures are above normal, storage levels are at all-time highs, and gas production is near all-time highs.Everything is pointing towards continued low prices and possibly even lower ones. Don’t get greedy! If you are looking to lock in prices, do it now.