Special Mid-Month Energy Update
The natural gas NYMEX Hub price closed in late October at $2.75/MMBTU. In the two weeks since then colder weather has appeared in the Midwest and Northeast. Natural gas Hub prices have risen $.45 to near $3.20/MMBU.
On November 9th NOAA made it official by stating that La Nina conditions have officially developed and may continue through early 2018. Although La Nina conditions never produce the same exact outcome there are “general” weather expectations that come with it. Specifically for Ohio it appears that near Columbus and points north should experience near or slightly below normal temperatures. For areas south of Columbus temperatures should be near or slightly above normal. The entire state is forecasted to experience much above normal precipitation this winter.
Even though the U.S. had an all-time record high weekly production level of 75.5 bcf/day last week’s natural gas storage injection was only 15 bcf versus 54 bcf last year. Right now the natural gas storage in the ground is trailing levels of a year ago by 5.5%. Consumers should see this as a big red flag. Overall demand for natural gas is on the increase and even with a record production week only 15 bcf went into storage. What is the worst case scenario this winter? The mid-west and northeast has a prolonged much below normal temperature plunge and demand surges and production freeze-offs occur. If this occurs market prices will likely soar. Hopefully this worst case scenario doesn’t happen, but best have sound buying strategy in place.