Over the past few months, the natural gas market has seen high production levels and storage at a record level. Couple this with the non-existent winter thus far and we are currently in a period of natural gas and electric prices as low as we’ve seen over the past 10-15 years. With a strong El Nino predicted, a milder winter is anticipated to continue. However, as we have seen in years past, Mother Nature can surprise us at any time!
When evaluating purchasing strategies for our clients, one of the tools we use are confidence intervals. We review historical data, and then calculate the anticipated swing the market could go up or down from its current prices. As you can see below, this example for the Henry Hub natural gas market, the opportunity for prices to decrease is much less likely than an increase. With so much uncertainty for the next few winters it’s important to have an energy strategy in place now that takes advantage of historically lower prices while they last, without exposing yourself to greater risk later. We encourage you to look into locking in prices at these record lows, or even do a blend of a variable and fixed option to extend out into the future.