Market Summary

Power prices have increased since last week. Winter forward prices (January, February, March 2015) are driving the entire forward strip higher. All other (non-Winter) months are at or near historical lows.

News on gas prices is mixed since last week. Natural gas markets are up today after reports of cooler weather heading into the Midwest and Mid Atlantic states next week. As we mentioned last week, countering that bullish news, the EIA reported an increase to natural gas stocks of 97 million cubic feet for the week ending September 19. Moody’s Investor Services cut price assumptions on both oil and gas through the end of 2015, which puts downward pressure on pricing. Read more about today’s news at Bloomberg online here.

As we’ve discussed repeatedly, natural gas prices drive the marginal cost of electricity. So, in short, gas price volatility will continue through the end of the year, particularly if Winter weather forecasts call for extreme cold.

Bottomline for businesses: Recommendations for how to navigate these markets will depend on your specific appetite for risk and the costs specific to your utility accounts. One thing is clear, there is no obvious strategy for managing these markets right now.