Rising Prices and Falling Temps, but Still a Good Chance to Lock in Savings: The Beacon, 10/19/2020

The Headline:   Natural gas and electricity prices are up through early 2024, pulling all of the strip prices up.  Storage numbers are still setting 5-year highs, drilling rigs are up again, but weather is largely colder than normal.   We suggest locking in rates if you have a start date later in 2021, but if you are looking for a prompt start, this is a week to stay on the sidelines.  

The Bottom Line:    All of the prompt-start annual strips are up, but prices remain attractive after 2021.   Natural gas in storage continues to set 5-year highs, but recent injections are coming in under expectations and 4000 bcf appears less likely.  If winter production is as low as projected, storage may be low (and prices high) come spring.  Weather forecasts are calling for mostly colder-than-normal temps, drilling rigs in the field had yet another good week, and the Gulf is quieter than it has been.  If you are in a contract that expires in 2021 or after, we recommend looking at rates – there is still a good opportunity to take price risk off the table this week in 2022-2025.   

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