Energy Market Update: February 21, 2018

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How will the natural gas market be impacted by commodity of price at the Henry Hub?

In this week's Energy Market Update, Tim Bigler — Direct Energy Business Energy Strategist — looks at low natural gas prices and assesses risk for higher prices.

Watch the video below to learn more.

NYMEX Natural Gas 12 Month Strip

Prices have not been able to sustain themselves over the last 18 months and that includes the 12-month strip, below the $2.70 level. Prices have had every opportunity to move down below that $2.70 level and even the 12-month strip has ceased to do that.

What are some of the reasons that may be pushing this price down and what might support it in the future?

The short-term answer is weather, like we discussed in earlier videos, this can have a major impact on the market place. This may also have a substantial impact in the summer if it becomes hot.

In the mid to long-term, weather continues to play a factor. On the supply side, our producers may no longer be looking to target production, but return on equity more and balance their portfolio. This means that gas production may slow.

Finally, industrial demand around the Henry Hub area - with Louisiana and Texas-is growing dramatically.

In conclusion:

• The lower we go, the more gas we typically use for our generation
• Weather is going to be a significant factor in the short-term and in the long-term from the supply side
• Fiscal discipline from producers may slow production gains
• LNG growth could have a substantial impact on the demand side.

Stay tuned to the Direct Energy Business Blog for the latest energy market news and information.

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Posted: February 21, 2018