El Nino Weather Pattern May Create New Buying Opportunities for Commercial Clients
New El Nino weather patterns may be making a major impact on gas prices, according to new estimates from the U.S. Energy Information Administration. Thanks to an oversupplied gas market and El Nino weather patterns, the EIA is expecting that both the short-term and long-term natural gas prices may be influenced. This means both large commercial clients and industrial customers will be presented with a new attractive buying opportunity.
These forces, along with the market’s current multiyear price low, may potentially put the market on the precipice of an important shift. According to Andy Weissman, the CEO of EBW Analytics, at this important changing point prices can break significantly, “in either direction.”
As for what the EIA suspects in November, some analysts feel as though we could break the record inventory levels set this month, which in tow with unpredictable fall weather patterns, could cause one of two changes in the market. First, there is what experts believe is the most likely option. This is that the oversupply of natural gas, along with the weather changes, will cause the Pacific jet stream to buckle under the influences of the weather and push low pressure systems through the southern and western portions of the country. This will increase the number of days that consumers need heat, therefore increasing the gas demand, with prices increasing anywhere from 15 to 20 cents.
On the other hand, if the Pacific jet stream doesn’t buckle, another situation could unfold. The oversupply of natural gas will be combined with much warmer weather in many of the Southern Tier states. While this scenario is not as likely as the aforementioned situation, it could through off the winter weather balance, resulting in a mild winter season, meaning an oversupply of natural gas paired with a plummeting need for the commodity.
If El Nino collapses, on the other hand, it could result in a much colder winter, driving demand for gas up as inventory levels drop. If these colder temperatures do emerge, Weissman has be quoted as projecting that short-term prices could settle in anywhere from $3.10 MMBtu to $3.40 MMBtu. If the warmer winter weather scenario unfolds, then short term prices could drop as low as $2.00 MMBtu.
In short, there is a potential to turn the natural gas market into a very volatile one this year, meaning it is more important than ever for commercial consumers to understand the opportunities that exist in today’s energy buying market.
Experts are encouraging businesses of all types to understand the impact that these upcoming weather changes could have on their business, so they can lock in the right products and prices now before the winter season unfolds. Planning ahead is one of the best ways for companies to minimize the risks for their business moving forward. Ultimately, the natural gas price predictions are still uncertain, and analysts are simply trying to prepare consumers about the potential outcomes of the current market, strictly for educational purposes, so today’s consumers can make the best choices possible to fit their individual needs.
Original story appeared on GDF SUEZ’s website.