Energy News: A Second Powerful Polar Vortex Didn’t Develop, But Natural Gas Has Continued to Rally
Energy News Update: March 11, 2025 A Second Powerful Polar Vortex Didn’t Develop, But Natural Gas Has Continued to Rally
Energy News Update: March 11, 2025 A Second Powerful Polar Vortex Didn’t Develop, But Natural Gas Has Continued to Rally
Energy News Update: March 11, 2025
In our Mar 3rd Energy Update we said Severe Weather Europe was forecasting a “final Polar Vortex stronger than the Feb Polar Vortex arriving in mid-March and if their forecast was correct prices would likely move sharply higher from present levels, but even if they were not accurate, we believed the average price for Natural Gas and Electricity would be higher over the next 2 years, and recommended risk-adverse clients consider taking advantage of the previous week’s decline and reserve electricity to be available when their present agreements expire.
Although it appears the Polar Vortex forecasted by Severe Weather Europe is not developing, Natural Gas moved higher after our Mar 3rd report, supported by record amounts of Liquefied Natural Gas (LNG) exports and most analysts expecting tight supplies ahead of the summer season:
Therefore, Natural Gas continuing to rally did not surprise us at Energy Professionals.
In our Nov 12th, 2024 Energy Update, we said Natural Gas was trading at $2.67 per MMBtu on Election Day and asked, “Does Donald Trump’s election Guarantee Lower Natural Gas and Electricity Prices?”
In that report, we explained that based on what has happened since 2000, when Natural Gas was as low as it was in 2024, it always preceded Cyclical Bull Markets with the average price higher 2 to 4 years, and it didn’t matter who was president at the time:
As you can see, after Election Day, Natural Gas rallied from $2.67 per MMBtu to much higher prices today:
But the question is, where are Natural Gas prices likely heading, and what hedging strategy is best for you at this time?
Based on the empirical observation that since 2000, when Natural Gas prices were as low as it was in 2024, the average price was always higher at least 2 to 4 years, we believe prices will remain high through 2026, which was confirmed by today’s prices in the forward markets:
Month | 2025 | 2026 | 2027 | 2028 | 2029 |
Jan |
| 5.67 | 4.97 | 4.57 | 4.37 |
Feb |
| 5.27 | 4.49 | 4.31 | 4.11 |
Mar |
| 4.54 | 3.82 | 3.64 | 3.43 |
Apr | 4.49 | 3.99 | 3.34 | 3.17 | 2.96 |
May | 4.54 | 3.98 | 3.35 | 3.17 | 2.99 |
Jun | 4.69 | 4.07 | 3.48 | 3.27 | 3.14 |
Jul | 4.86 | 4.18 | 3.61 | 3.39 | 3.29 |
Aug | 4.89 | 4.21 | 3.65 | 3.46 | 3.34 |
Sep | 4.85 | 4.17 | 3.62 | 3.43 | 3.32 |
Oct | 4.87 | 4.27 | 3.68 | 3.51 | 3.39 |
Nov | 5.06 | 4.37 | 3.89 | 3.72 | 3.61 |
Dec | 5.44 | 4.72 | 4.31 | 4.13 | 4.03 |
AVG | 4.85 | 4.45 | 3.85 | 3.65 | 3.49 |
As you can see, prices are higher in 2025 and 2026 than 2027 through 2029. Therefore, if your agreements expire in 2025, you may consider dollar cost averaging by securing longer terms to take advantage of the lower prices from 2027 through 2029.
And if your present agreements expire in 2026, you have more time to enjoy the lower pricing you likely have, but you may also consider reserving energy to take advantage of the lower prices from 2027 through 2029.
Not every client’s risk tolerance and hedging strategy are the same, but hopefully, today’s report helps you understand your risk/reward opportunities. We invite you to call one of our energy analysts to help you plan a hedging strategy appropriate for your situation.
Ray Franklin
Energy Professionals
Senior Commodity Analyst
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