Energy Management

Winter Warm Up and Low Storage Levels Drive Natural Gas Prices

During the December Energy Market Intel Webinar, Constellation’s Commodities Management Group (CMG) provided an update with changes to the winter 2018/2019 outlook along with a review of key production and demand fundamentals, as well as a 2018 year in review.

The analysts identified two major influencers in the recent surge in prompt-month natural gas and power prices: weather and storage.

Weather Update

The weather has been the primary factor in spurring prompt-month natural gas prices upward by as much as 50% over the past six weeks. November came in cold, the first half of December has been mixed, and the second half of the month appears to be warming up considerably above normal throughout much of the country.

NYMEX prompt month broke key $4/MMBtu technical support as milder temperatures in the near-term keep pushing back the return of colder forecasts for January. Weather will hold the key to price direction against a backdrop of record gas production and a 700 Bcf storage deficit.

Natural Gas Storage and Production

Natural gas storage inventories, currently at a 15-year low, finished November at their lowest level since 2002 and weather will remain a key driver as concerns over end of March storage support NYMEX 12-month strip pricing.

Natural gas production has continued to reach new highs into and through the fourth quarter of this year, having an impact on the effects of the general price direction of the market.

The Impact on Power Prices

In the very early stages of winter, cold weather and volatile gas prices have already put upward pressure on index power prices. Given the size of the gas storage deficit, energy buyers should prepare for the possibility of more severe price spikes if colder than normal weather continues into the peak of the heating season.


We want to thank all of our listeners in 2018, especially, our customers and channel partners and look forward to continuing the discussion in our 2019 Market Intel Webinar series. In our next webinar on January 23, 2018 at 2 p.m ET, we will highlight the market fundamentals, pricing action, and we will look at key drivers and third-party forecasts for production, exports, power-generation demand and industrial consumption, and how those things may come into play throughout the coming year. Register today.

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