August 20, 2018 Dan Levin Energy Markets, procurement

Winter rates begin to rebound.

The Bottom Line

As we mentioned last month, something had to give. A combination of hot weather and low storage amounts can’t result in low pricing forever. Now, in the last two weeks, pricing has finally ticked up. The January gas rate has increased from $2.96 to $3.17/mmbtu since 7/18. Opportunities to lock in year-to-year savings are still available, they will become more difficult to capture as the month progresses.

What to know about 2018

After the increase, wholesale natural gas prices are now just 6% lower than 2017 on average. Last month, that number was 8%. Above normal temperatures continue to cause increased demand for electric generation for air conditioning, which reduces the gas we have in storage. At this time, we strongly recommend all customers who use Natural Gas for heating to evaluate their replacement supply contracts and consider switching off volatile utility rates if they are served by the utility.

Why Act Now

As we close out summer and head towards winter, the lower amount of natural gas in storage is a clear signal that market volatility will occur as 2018 progresses. Prices have already begun to rise, and capturing savings now compared to your last contract or to the utility rates is a safe maneuver.

Temperature Probability Maps

August and September will continue to be hot, highlighted by the West Coast and Northeast. This summer may end as the hottest on record. An El Niño effect is forecasted for this winter, which may lower rates by creating milder temperatures. The orange/red in the maps below indicate heat increases from normal. Continued hot summer weather will cause upward pressure on pricing, while a mild winter can mean low demand and low prices.

August, September, October 2018
August, September, October 2018
Fall 2018
Winter 2019