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Energy Buying Strategies in the Current Market

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Per last week’s Energy Market Update, I have provided some energy buying strategies in the current market.

Market Overview
Volatility and weather have been the key market drivers over the last month but that should not be a surprise since November is a winter month and weather is the key driver of short-term natural gas prices. We saw a mild start to November that drove forwards down and most natural gas contracts hit their all-time lows — even besting prices that were available during early 2012. However, this dip was as short-lived as the mild weather. November quickly turned cold and natural gas futures rallied.

Prompt Month futures rose by almost 50 cents to 6-month highs before stalling near $4.00, their key resistance level. And, prices broke through that threshold yesterday, thanks to a bullish storage report. Longer-term prices also rose but more slowly, as the rally was driven by short-term weather and the spread between the near- and long-term narrowed significantly.

(all prices are in MMBtu)
NYMEX Contract
1/15/14 Change since 12/6/13
Prompt Month $4.36 +0.25 cents, $4.46 on 12/19 was Prompt high since July 2011
12-Month Strip $4.20 +0.06
Cal '15 $4.11 -0.05 all-time low of $3.83 on 11/4/13
Cal '16 $4.11 -0.10 all-time low of $3.98 on 11/4/13
Cal '17 $4.25 -0.13 all-time low of $4.09 on 1/9/14


Posted: January 20, 2014