April 2017 Newsletter
How Hot Will This Summer and Energy Prices Be?
- EarthStat reports that since 1950 nine out of the ten warmest winters have been followed by hotter-than-normal summers
- NOAA predicts another El Nino will form this spring and summer.
- If the El Nino forms slowly as NOAA predicts, they expect a hotter than normal summer
- If the El Nino forms quickly as some models predict, the summer could be cooler
- NYMEX natural gas closed a month go $.55/MMBTU lower than the current $3.175/MMBTU
After an extremely warm February in the Midwest, expectations were for March to be extremely warm as well. However, March was seasonably cold for most of the month. Many in the industry were forecasting for energy prices to finally collapse in March before rising in April. They missed it again. One thing my 3 decades in the energy business has taught me is that when too many people expect a certain thing or event to happen normally the opposite occurs. Many times speculator and hedge fund market traders use this common knowledge to push the market to extremes or the opposite direction of expectations or what one would generally believe to be true. March surprised many with its cold weather in the Midwest and northeast. Natural gas production will continue to have a hard time meeting usage need; consumer use, electric generation and exports. Now storage injections also enter into the mix for April. If production cannot keep up with all the demand, expect prices to rise until new production comes to the market. Drilling is expected to increase supplies in 2017, but until demand is met and exceeded don’t expect a big price collapse. Which means, it’s best to buy on price dips when they occur. Electric prices are rising too so we may be seeing better prices for both natural gas and electric now than what may be available in a month or so.
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Read March 2017 Newsletter
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