RD Energy Newsletter: June 2017

June 2017 Energy Market Update

Key Drivers

  1. Remember:  Natural gas wholesale prices and electric wholesale prices run in close parallel and that natural gas prices are more highly traded as a part of the active commodities market
  2. Natural gas production in the U.S. versus natural gas demand in May was very close to being equal
  3. Here are the big three driving questions for this summer and the rest of 2017:
    1. Will we have a hot summer meaning that natural gas consumption will rise dramatically as it’s used in a much higher degree in the making of electric?
    2. Will natural gas exports keep growing as expected?
    3. Can natural gas production grow enough to meet the growing usage and storage demand?


In February 2017 we saw the lowest prices of the year for natural gas and therefore electric wholesale prices.  Since then and until now we’ve seen wholesale prices rise as questions surfaced about disappointing gas production numbers versus growing gas demand and lower than expected storage injections.  Questions of production growth keeping up with overall demand will continue surfacing each week and each month.  It appears that natural gas production and natural gas demand are close to being equal.  Prices will rise and fall as demand rises and falls until confidence in new production growth to meet and beat demand becomes a common feeling among traders.  Cooler weather over the past week and more predicted through mid-June in the Midwest and Northeast along with a higher than expected storage injection has helped ease prices some.  In late May we saw natural gas prices go from trading at $3.236/MMBTU to the current price of $3.01/MMBTU.  The price down can continue as long as weather forecasts continue to look cooler than expected two weeks out.  Just keep in mind that weather forecasts two weeks out into the future change often and traders/buyers will be watching for warmer weather forecasts to jump back in.  Those consumers looking to get an electric or natural gas contract bought soon may want to look at this price dip as a good opportunity.

Schedule A Meeting!