Natural Gas storage levels have continued to improve with steady weekly increases and this has helped keep natural gas futures prices very low. The recent heatwave set many electricity ICAP peak tags for next year. The additional air conditioning demand also exposed the grid’s installed capacity ceiling in some areas which may lead to additional electricity cost increases.
The Bottom Line
High production of natural gas and mild spring temperatures have reduced the natural gas storage deficit and softened prices to multi-year lows. This trend has created an excellent opportunity to lock in low priced fixed supply for those who need to perform to budgets. We expect these prices to remain barring another prolonged heatwave. Be prepared: weather-driven price changes and high summer heat could impact winter prices.
What To Do Now
If you have accounts on utility supply or a variable rate, this is your opportunity to consider moving to a fixed-rate contract. Prices have declined, and there is a risk for late summertime price increases. If you have contracts expiring between now and the end of the year, we recommend you price them early and evaluate your term options closely on your next supply contracts.