More Low Winter Temps Means Rising Energy Prices. The Beacon, 02/15/2021

The Headline:   Last week, more cold weather drove natural gas prices up slightly through 2024, and prices are up less than a penny after that.  Short term electricity prices will be up this week, but the longer terms are still the smartest buy.  Gas storage levels are creeping down toward to the 5-year average, and the market fears a +200 bcf withdrawal next week.   That would drive storage levels below the 5-year average, and may drive prices up.      

The Bottom Line:    With prices up slightly based on cold weather forecasts, it appears that the market’s concerns about the risk of dropping storage levels and low rig counts are coming to pass.  Immediate-start contracts are feeling most of the impact, but the longer-term contracts are still very attractively priced.   The 60-month term is trading at 14% above the 10-year low.  Low drilling rig counts saw another small increase, and cold weather is dominating the forecasts for most of the country through the end of the week.  The market is still worried about rising prices through the remainder of the Winter and Spring, and while immediate start contracts may want to wait a week in hopes of milder weather, we are still recommending that you lock in your electricity and natural gas rates ASAP.       

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