TMT: Is Now a Good Time to Buy Energy?

Video Transcript

Hello everyone! Welcome back to another Nania Energy Advisors’ Two-Minute Tuesday. I’m AJ Brockman, Nania Energy’s Content Marketing Manager. And today we will be talking with Senior Energy Advisor Mike Zaura.

We’ve seen a lot more market volatility recently, which has led to some clients asking us, “Is now still a good time to buy?” And that’s what Mike and I will be talking about in today’s video.

Recent Market Movement

AJ: So Mike, most states started putting COVID-19 measures in place in early March. What have the energy markets looked like in these past two months?

MZ: Thank you, AJ, for the question. Yes most states started those in early March, but we started seeing energy markets go down as early as the end of February. And as the chart shows here, you can see the steady decline.

Source: ino.com, New York Mercantile Exchange Natural Gas 3 month history

So that coincided with equity markets. As we all know, stocks went down quite a bit and everybody felt the pains of watching that happen.

But energy markets went down quite a bit as well. Now, while stocks and equity markets have recovered, the energy markets have not. They’ve recovered a little bit, but a lot slower than the equity markets.

So, while the energy markets are still down, there’s a lot of volatility still out there right now. A good example of this is what happened a couple Mondays ago. There was a pipeline explosion in Kentucky, and overnight and going into Tuesday morning gas markets spiked about 8.5 percent.

Now that’s volatility that’s not COVID-related, but it gives you an idea of some of the spikes that can occur and how the market recovers after that.

Is Now a Good Time to Buy Energy?

AJ: Okay Mike, let’s answer the question that’s on everybody’s mind. Is now a good time to buy?

MZ: An excellent question, and yes it is a good time to buy.  But, more importantly, it’s a better time to explore your options. A lot of the questions we’ve been getting recently are “With all the volatility going on, should I even think about buying? Should I wait? What should we do?”

If you explore your options, that’s one of the best things you can do right now. This puts you in a position to at least see what’s out there — you can see what rates and term options are available to you. Regardless of when your agreement is up, whether it’s a few months from now or the end of 2021, exploring your options now gives you ability to make a good decision on whether to buy now or wait.

What Do You Recommend?

AJ: What would you recommend to your clients today?

MZ: Exactly what I touched upon a little bit earlier: explore your options. In addition to looking at what’s available now, it also sets you up if you do decide to wait. If you’re willing to wait and are a little less risk adverse, then you are set up to take advantage of a little volatility in the market.

To give you an example, say the market goes down 3-5 percent on a given day. If you did explore your options, you’re already set up with suppliers with your account information and they have everything they’re looking for. If the market goes down, you can easily jump on an opportunity to grab those savings. You wouldn’t be able to do that if you weren’t set up earlier than that.

So exploring your options is the best recommendation. Maybe you’d see 10-15 percent savings right now, maybe 20 percent savings. What kind of impact could that have on you and your bottom line during these times? So you can act now by exploring. If you like what you see, great. If you have a little more time to wait on your agreement, that’s even better. You can take on a little more risk if you have the appetite for it and then jump on the market opportunity when it presents itself. Those would be my recommendations right now.

AJ: Well thank you so much, Mike, for all of that awesome information. And thank you to you all for watching! If you found this video helpful, please like, comment, or share below, and be on the lookout for next week’s Two-Minute Tuesday video.

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