Natural Gas Storage
Slightly Higher Than Expected Injection - Help Drive Prices Down
It’s mid-November and we are still building our storage levels. Last week, the US Energy Information Administration (EIA) reported an increase of 54 BCF; slightly higher than forecast. This latest injection pushed prices down under the $2.70 /MMBtu threshold. Current storage levels are at 4,017 Bcf, 1.2% above last year and 4.9% above the 5-year historic average.
Weather Forecast:90-Day Outlook - ExpectNormal to Above Average Temperatures Through January
National Oceanic and Atmospheric Administration continues to predict a high probability of normal to above normal temperatures through January for the entire country. Texas, New Mexico and Arizona are predicted to see temperatures well above normal.
In November, the entire country is predicted to experience above normal temperatures, with only the Pacific Northeast seeing normal temperatures.
NOAA is predicting the Great Lakes states and the northern Rocky Mountain states to experience a wetter than normal winter season. The southern states should expect a dryer than normal winter.
Natural Gas Prices Fell the Past Two Weeks
November has seen natural gas prices fall significantly; dropping over 22% in the past month. December natural gas contracts are trading at $2.68 / MMBtu on the NYMEX. Dropping prices are mostly due to continued warmer-than-normal temperatures, record storage levels and soft demand levels.
The natural gas front-month market has been on a roller coaster ride these past few months. On October 13th, prices hit a 22-month high of $3.34 / MMBtu. As of November 10, prices dropped to $2.619. Needless to say, with prices this low, everyone should be looking to lock in prices for this winter and beyond.
Long-term strip prices (Calendar 2017, 2018 and 2019) are all dropping. In particular Calendar year 2017 is down about 15¢.
Natural Gas PricesHave Dropped Precipitously the Past Month
The great news is that prices near-term and long-term are dropping. Storage levels continue to build and mild weather has kept demand down.
Points of concern – We do not know what impact the new Administration will have on energy prices. President-Elect Trump has stated the need to make the U.S. independent of energy imports and possibly lifting restrictions on fracking. Also, natural gas imports and exports with Mexico may impact gas futures prices. And some are still predicting a colder than normal winter ahead of us.
As of today prices are low well out into the future. Look hard at locking into these prices before they spike again like we saw in October.