Recent natural gas price rallies may slow or possibly weaken for a brief period. Be ready to execute a short-term winter hedge quickly. Plan to reevaluate risk tolerance and procurement strategy in spring 2022.
Most fundamentals for natural gas pricing are bullish. There is little keeping natural gas bearish for the future unless massive increases in production and reduced electricity demand are realized.
A confluence of extreme weather, low storage supplies, high U.S. demand, increased LNG exports, and flat production have led to sustained price rallies that are defying expectations.
As we enter August, there are multiple risks that could drive expensive electricity prices in Western regions.
Natural gas generators have been in high demand to power cooling loads and supplement parched hydropower markets. Booming exports and more steamy weather will keep supplies down and prices up.
With record heat and drought conditions, pricing has focused on near-term weather and expectations for both strong domestic demand and U.S. exports.
With growing concerns about drought conditions in the West and the potential for a warmer than normal summer, prices will remain elevated in the near term.
Utility costs are out of control. Ecom-Energy’s objective consulting services can help!
Low storage injections and early hot-summer forecasts along with continued strength in LNG exports are supporting the gas market in recent weeks.
As the U.S enters the natural gas injection season, short-term (12-month) contracts continue to carry a premium thanks to lackluster production and less than ideal storage.