Energy News – November 2020
As we begin to turn our attention to 2021, we want to give you an update on the current state of the natural gas industry as well as provide a glimpse as to where we’re headed for the next couple of years.
The price of natural gas has been very volatile. As we head into the winter months, which traditionally means higher demand for natural gas, we’re expecting prices to increase significantly. At WoodRiver Energy, we want to be your partner in navigating the natural gas market by providing the same information we use day-to-day to help you manage your budget.
Short Term: Winter is Coming
Weather plays a significant role in the demand for natural gas as homes and businesses spend a majority of their usage on heating. According to the Farmers’ Almanac, the long-range forecast calls for a cold winter with normal to below-normal temperatures in the Midwest, Great Lakes, and the Rockies.
Although we continue to have a record amount of natural gas in storage at 3,919 Bcf. Natural gas rigs are down 45% percent compared to last year.
Long Term: Cloudy with a Chance of Higher Prices
In addition to the weather, 2020 has added additional stressors to the market: Production is down and natural gas used for electricity generation is at an all-time high. Now, many of us find ourselves at home more frequently. This trend has not gone unmissed by the US Energy Information Administration, they are predicting an increase of 5% in demand over last year. The combination of weather, low production, and increasing demand is expected to result in higher natural gas prices.
What should you do?
If you’re on either the Variable Rate or Guaranteed Savings Program, we recommend considering a protection-based natural gas program to help safeguard you from the volatility in the market.
If you are not already on our Guaranteed Fixed Price program, we would highly recommend you sign up to our Price Protection program. Price Protection provides topside protection against natural gas spikes and downside participation during low-demand months.