When the Time is Right

Wondering when to lock in your energy supply contract? Although there is never really a “perfect time” to buy energy (which is why it’s important to always be monitoring energy prices), shoulder months often present good buying opportunities. And that time is coming in the Northeast – but it won’t be around for long.

Key price drivers, weather and natural gas production and storage, are showing favorability towards another year of reduced prices come March. As you can see in the chart, the last three years have seen dips in the spring when temperatures are mild and the natural gas storage injection season is coming to a close.

While signs are pointing to late first quarter as a good time to buy, no one can guarantee it. Here’s how we see key market drivers dividing up:

Bearish Market Drivers (supportive of price dips)

  • Year-over-year natural gas storage deficit has greatly reduced
  • Only two weeks of triple-digit natural gas storage withdrawals
  • Natural gas production growth from 83.3 Bcf/d in 2018 to 90.2 Bcf/d in 2019 and projected 92.2 Bcf/d in 2020

Bullish Market Drivers (supportive of price spikes)

  • Cold weather can provide momentum for higher pricing
  • Exports of LNG and pipeline flow to Mexico continue to grow
  • Generation mix focused on natural gas, which continues the winter price risk scenario

Our Recommendations

Look at pricing now so that you are in the position to take advantage of favorable price movements when they occur. Getting started now also prevents you from having to be a price taker down the road when the market may be less favorable.

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