Natural Gas: Calm Before the Storm About to End?

In the August 15th Energy Update, I said we were experiencing the calm before powerful storms may trigger an explosive rally in Natural Gas. Over the last two weeks conditions remained unfavorable for storms to develop off the African coast, but that is about to change:

The above picture is a snapshot of the National Hurricane Center’s storm projections over the next five days. Conditions are becoming more favorable for tropical development in the deep tropics covering the region between Africa and the Caribbean Sea. Over the next 30-days the risk of a major storm impacting the Atlantic and Gulf coasts will greatly increase as we enter the height of the hurricane season in September. 

This year the consequences of a major storm impacting the price of Natural Gas  is more dire than normal because our present administration’s energy policies caused supplies to be at least 12% below the 5-year average by the middle of September.

The three risk factors discussed in the May 31st Energy Update, are firmly in place, and as I explained in the Mar 7th Energy Update, we are experiencing the long-term consequences of moving away from fossil fuels and towards green energy policies.

Therefore, we recommend taking advantage of calm before storms to reserve Natural Gas and Electricity to be available when your present agreements expire. A major storm would disrupt production of Oil & Natural Gas in the Gulf region and Natural Gas and Gasoline prices would likely skyrocket from present levels.

But fortunately, as we explained in previous reports, Natural Gas prices are lower in the forward markets from 2023 thru 2026; and we recommend securing longer-term agreements that include the lower prices from 2023 thru 2026.

Also, as we said in recent reports, when appropriate our consultants will also help you secure blend and extend agreements to take advantage of an even sharper longer-term pullback if and when it finally comes. The bottom line is we are living in a period of great uncertainty, and we are here to help you navigate these perilous times

Not every client’s risk tolerance and hedging strategy are the same, but the above report will help you put into perspective the risk/reward opportunities. I 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