An earlier – and colder – start to the already
lengthy winter season in the northern regions of North America has led to
increased volatility in the pricing of natural gas futures, according to a
recent report posted on the Natural Gas
Natural gas futures were recently trading higher,
with forecast heating demand gains setting the stage for volatile trading for
the contract going forward.
Below Normal Temperatures
Bespoke Weather Services said colder trends expected
in early December have resulted in an increase in its gas-weighted degree day
“Additionally, Canadian guidance and to a lesser
extent American guidance decreased long-range warm risks slightly, though they
still showed an overall pattern progression that met expectations and indicated
a rapid fall-off in GWDDs beyond Dec. 10,” Bespoke said.
Temperatures across Southern Ontario and the U.S.
Northeast are expected to remain colder-than-normal in the near term, providing
some support for decreasing natural gas storage levels and rising prices.
It’s important to note that natural gas prices for the winter have
increased nearly 30% since the beginning of November. Low storage levels caused
by colder-than-normal weather is one of the driving forces behind the increase.
The price rise has so far only impacted the December
2018 to March 2019 period, with pricing starting in April 2019 mostly
unaffected by the recent market movement.
Active Business Services notes that a
recent natural gas storage report showed a significant decline in storage
levels: a reduction of about 134 billion cubic feet, which was 18% above
analyst predictions. Storage levels are nearly 19% below their five-year
However, current utility pricing has not been
factored into the near-term natural gas price swing, so it’s likely that
utilities will start increasing their prices on Jan. 1, 2019. Industry insiders
suggest that it’s best to advise clients of the coming increase sooner, rather
than after costs rise.
Energy Assessment and Management Services
Active Business Services’ energy assessment services
provide business customers with the ability to spread risk across various
hedging strategies rather than absorb all the risk with a single supply
arrangement. This is particularly important in volatile price conditions. Active
Business Services also offers full-service solutions that range from portfolio
management, nominations, reporting, invoicing, and asset optimization.
Cold weather is a fact of life for Canadians. But, Active Business Services can
help businesses effectively manage risk with proven diversified strategies.
Author: Active Business Services
Active Business Services is an energy management firm that
has dedicated the last ten years to providing Canadian commercial and
industrial customers with natural gas and electricity supply and risk
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