The Curious Case of an Inverted Natural Gas Market – A Decreasing Futures Strip

From BlueRock Energy Wholesale Operations Group

Comparison’s on current gas price levels- 12 month vs. 36 month terms

The current standing of the natural gas market is indicating a situation that is typically rare, showing a form of inversion. The meaning of this inverted natural gas market can best be explained when the current or short-term contract prices are higher than the long-term. In this instance, the natural gas market shows lower 36 month prices versus 12 month prices. The NYMEX component of the delivered gas price is generally declining for each of the upcoming three years.

Therefore currently, the gas market is predicting a lower 12 month strip in pricing within the next year to two years. For example, comparatively speaking, a given month in 2018 or 2019 is predicted to be traded at a lower price than that same month in 2017.

From an industry point of view, there are a number of factors that could be a result of this inverted market. Several potential reasoning’s behind this could include, new pipeline projects in 2017, delayed pipeline projects in 2018 and beyond, increased production as a result of current prices, the state of existing gas in storage- being at the lowest level in three years, and summer/winter forecasts.

What this means to you

If you’re looking to lock into a fixed product with an Energy Supply Company, this could be a good time to do so, with a fall 2017 start date. However, you will want to know that locking into a 24 or 36 month term would offer you a cheaper rate per dekatherm than by only locking in for 12 months. Note that this could be a temporary situation if supply and demand factors rise in the future months, thereby eliminating the ability to lock into multi-year terms at a cheaper rate than the 12 month term.

BlueRock Energy is a trusted Energy Supply Company (ESCO) that serves over 19,000 consumer’s natural gas and electricity products throughout the Northeast. BlueRock Energy gives both home and business owners the option to lock in with a fixed energy rate, one option that the local utility company cannot provide. If you’re interested in locking in under a fixed product with BlueRock, call us at 877-280-4909 or contact us at info@bluerockenergy.com to be connected with an Energy Advisor in your area.

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