While a relatively mild July has continued into early August, the forecast for the Northeast has shown weeks of below normal temperatures, followed by a warm finish for the month of August. As we head into September, temperatures are expected to remain mild on average. However, as we currently experiencing throughout mid-August, the average temperatures begin to drop throughout the Northeast.
So, how do these factors impact pricing?
Gas prices are always driven by supply and demand, and future expectations of supply and demand. Most recently, demand for energy has been below average. Milder temperatures have impacted energy usage by homeowners, most specifically by the reduced use of air conditioning. This reduction in usage has impacted the power plant demand, notably a major gas user. Year to date, demand by gas fired power plants is down by approximately 10% from last year. The lower demand is related to lower temperatures, but also is affected by their switching fuels from gas to coal. When gas prices are higher, coal becomes more economical for them.
On the supply side, gas is being produced at some of the highest levels that we’ve seen in a while. July’s average production of 72.5 bcf/day is the highest since March 2016.
Where can we expect prices to go?
Prices will likely remain range-bound as we enter the beginning of the shoulder season for gas. The shoulder season is generally classified during the months of mid-September until mid-November, and mid-March through mid-May, which is when prices typically decrease because demand is lower.
Currently, prices are on the lower end of the range. As a result, the timing is right to lock in your energy supply with BlueRock Energy. Doing so, you can avoid energy market spikes that could rise as we transition into the colder, winter months.