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Energy Market Update: November 13, 2018

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Buying natural gas futures isn’t always a simple process. Today Tim Bigler examines historic trends and looks for future opportunities to save:

NYMEX Natural Gas Prices

The current spot contract price for NYMEX natural gas is the December 2018 price. When we look at this price in comparison to the futures price for this date -- meaning the December 2018 price -- from six months ago, we can see that prices are higher now than they were then, and are, in fact, higher than they were a year ago in November 2017.

However: Looking closely at prices from today, six months ago, and a year ago, for May 2019 contracts specifically, we can learn an important lesson: the May 2019 futures price is relatively high now. It was at the same elevated level a year ago. But six months ago (in May 2018) this price was substantially lower than it is today, which means that anyone who bought this contract in May 2018 got a good price for it, while those of us who didn’t may see it as a lost opportunity, in hindsight.

With that lesson in mind, let’s look a little farther out: futures contracts for May 2020. A year ago, this contract was around the same relatively high level as the May 2019 contract today. But as of right now, May 2020 is priced at roughly the same level that it was six months ago -- in other words, around that “good price” level. So while prices in the short term are high, there may be opportunities in the medium- and long-term for bargain-hunting.

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Posted: November 13, 2018