As we transition from winter to spring, the energy market is experiencing significant shifts. Here’s what you need to know:
Weather and Demand
The warmer temperatures forecast has impacted pricing as we move from February to March. February settled at $3.53, while March opened nearly 50 cents lower at $3.072. We’re expecting one more cold front, which may cause an uptick in demand compared to recent weeks, though likely not as severe as January’s event that led to production drops due to well freeze-offs.
Supply and Withdrawals
A season-high withdrawal of -321 Bcf, exceeding expectations by 14 Bcf, was reported. Despite this, pricing dropped at the end of the month due to warmer weather forecasts and market sell-offs, resulting in a nearly 50-cent decrease over two weeks.
Long-Term Pricing Trends
Interestingly, gas prices for 2025 and 2026 have risen higher than future years, suggesting that longer-term agreements may be more favorable. This pattern indicates extreme short-term volatility rather than long-term stability.
NYMEX 12-Month Strip
ALL ABOUT THE NYMEX TWELVE-MONTH STRIP
• The NYMEX Twelve Month Strip is the average of the upcoming 12 months of closing Henry Hub natural gas futures prices as reported on CME/NYMEX.
• A futures strip is the buying or selling of futures contracts in sequential delivery months traded as a single transaction.
• The NYMEX Twelve Month Strip can lock in a specific price for natural gas futures for a year with 12 monthly contracts connected into a strip.
• The average price of these 12 contracts is the particular price that traders can transact at, indicating the direction of natural gas prices.
• The price of the NYMEX Twelve Month Strip can show the average cost of the next twelve months’ worth of futures.
• The NYMEX Twelve Month Strip is also used to understand the direction of natural gas prices and to lock in a specific price for natural gas futures for a year.
LNG Exports Reach 12-Month High
With the addition of shipments from the Plaquemines facility, LNG exports have hit a 12-month high, signaling increased demand in the global market.
Recommendations for Energy Consumers
- Eliminate Premiums and Fixed Pricing: This should be your top priority to reduce unnecessary costs.
- Consider Variable Strategies: Work towards implementing a variable pricing strategy where possible.
- Explore Managed Energy Products: Our energy experts can help you:
- Lock in on-peak hours for the upcoming summer
- Implement a small 25-50% hedge for next winter
You can navigate the volatile energy market more effectively by staying informed and strategic. Contact our team for personalized guidance on optimizing your energy strategy.
