Take a look at the recent run-up in electricity forward curves.

There are a number of reasons for this run-up: weather, speculation, gas withdrawals. Bloomberg’s article “Hedge Funds’ Natural Gas Bets Jump as Thermometer Drops: Energy“ summarizes all of the reasons for the run-up. We may see Winter power prices drop when (and if) the winter weather becomes more moderate. There is no guarantee, however, that weather will be as moderate as it has over the past few winters. The Farmer’s Almanac predicts persistent cold and stormy winter weather for 2014.

Bottom line for buyers: If you can wait to see what happens to forward markets when the weather becomes more moderate, you should do so. You should be cognizant of your risk tolerance before you make any energy purchasing decisions.