Prices are low...but maybe not for long.

Last week, the forward energy market continued the recent trend of extremely low prompt prices, rising prices in the near term, and flat prices further out. The milder version of this activity lifted all of the annual strips by 2-7 cents, and has us holding in a muddled contango shape, with the 12-month strip still the cheapest and the 24-month most expensive. The gap between the 12-month and the rest of the strips is closing -- only 9.5 cents separate the cheapest and most expensive strips. North American drilling rigs in the field are down sharply for a 6th straight week -- down 68 rigs this week on oil price collapse news, with the US rig count down 64 and the Canadian count down 4. That marks a 476 rig decrease in the last 6 weeks - a 50.7% decrease. The EIA reported a natural gas storage injection of 43 bcf -- right in the middle of the range of expectations, and near the 5-year average, but less than half of last year's injection of 92 bcf. The relative storage levels have held steady -- we are almost exactly in the middle of the 5-year avg and the 5-year max, 850 above the min (as set this week last year), and 20.5% above the 5-year average. This week's weather map is showing more extreme temperature forecasts, with almost the entire West showing a greater than 50% chance of normal temps, and the Great Lakes, Mid-Atlantic and Northeast regions expecting cooler than normal temps. We are maintaining our "buy" recommendation -- prices are still extremely low and again up only slightly from last week. The opportunity to lower future expenses continues to be available, and distributed solar projects are still in the money -- work to contract open positions and generation projects should continue, as prices and installation timelines should be expected to rise.

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