Volume 15, Issue 86 | October 29, 2018

The Ups and Downs of Natural Gas Prices

Cold weather increases demand while severe weather can disrupt supply


Used widely in heating and power applications, natural gas is currently the primary heating fuel of choice for U.S. residential homes. As we head into the winter season, homes and businesses are turning on the heat for warmth and comfort. 

If temperatures are colder than anticipated, natural gas prices can vary. Colder-than-normal weather can put upward pressure on prices because supply is often unable to meet short-term increases in demand. In some instances, severe weather may disrupt natural gas supply altogether. For example, in winter 2017, parts of northern Alberta experienced a natural gas supply outage caused by persistent cold temperatures. 

Natural gas supply in storage may combat some of the effects of seasonal increases in demand. Storage maintains the reliability of supply needed and can serve as a buffer during unexpected demand surges. Most recently, the U.S. Energy Information Administration reports natural gas inventories are lower than last year during this same period. This deficit could become bullish for prices if production cannot keep up with load demands as we move into the winter months. 

Domestic production and demand of natural gas are rising; natural gas consumption in the first half of 2018 averaged 12% greater than the first half of 2017. Due to few comparable alternatives, even small changes in supply or demand can result in large price movements. 

To help residential and commercial customers manage their energy budgets during the winter months, WGL Energy Services (WGL Energy) offers a variety of pricing plans, including fixed-price and variable price options. 

For information about WGL Energy natural gas solutions, click here


EIA (2017). Natural gas prices a function of supply and demand. Retrieved October 22, 2018, from https://www.eia.gov/energyexplained/index.php?page=natural_gas_factors_affecting_prices 

EIA (2018) Both natural gas supply and demand have increased from year-ago levels. Retrieved October 22, 2018, from https://www.eia.gov/todayinenergy/detail.php?id=37193

Editor's Note

Prices Mixed this Week as the Injection Season Comes to an End

Week in review for October 20 - October 26, 2018


On Thursday, the U.S. Energy Information Administration (EIA) reported that working gas in storage as of Friday, October 19, 2018, was 3,095 BCF.  This was an increase of 58 BCF from the previous week, and was larger than what the market was expecting.  Inventories are still substantially lower than the year ago levels (by 606 BCF or 16.4%) and the five-year average (by 624 BCF or 16.8%).  

After a warmer than normal summer, October’s temperatures in our region (as measured at Washington Reagan National Airport) have been a mixed bag.  For the first 11 days of the month, zero Heating Degree Days (HDDs) had occurred (compared to the 30-year average of approximately 45 HDDs).  From October 12th through 25th, there were approximately 129 HDDs (compared to the 30-year average of approximately 99 HDDs).  With current projections, we expect total October HDDs to be close to the 30-year average of 207 HDDs.  However, the National Weather Service is predicting a warmer than normal start to November for the entire East Coast, based on their most recent 8-14 day temperature outlook.  

Prices were mixed this week.  The PJM West Hub 12-month forward curve was up 0.1% this week, while the NYMEX natural gas 12-month strip was down 1.9%.  Stay tuned as we enter the winter heating season.


This past week's market information is provided as a courtesy to our customers and is not indicative of, nor should be relied upon, as representative of future transactions.

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Local Cooling Degree Days*


Cooling Degrees Days* 


May - 18

June - 18

July- 18

Aug- 18

Sept - 18

Oct - 18















 Departure from Normal













*Cooling degree days are calculated by comparing the day’s average temperature to a 65 degree baseline.  If the day’s average temperature is below 65, there are no cooling degree days that day.  If the average temperature is greater than 65 degrees, then subtract 65 from the average temperature to find the number of cooling degree days.