The Bulls and the Bears continue to bang heads. Natural gas and electricity prices increase one week and decline the next. As you can see from the graphs in this issue, energy prices have been range bound over the last year. During the recent two week period of May 20, 2011 to June 3, 2011, natural gas and and electricity prices climbed upward. However, for this seven day report period, the 12-month average price for natural gas at the Henry Hub well-head fell 2%. PJM Electricity prices which normally follow natural gas prices actually rose 2% during this period even though natural gas prices dropped 2%.
We can blame hot weather for the recent electricity prices increases. The hot temperatures caused a spike in energy demand as the electric power plants had to produce extra electricity needed to meet this higher than normal cooling demand. The 8-14 day forecast continues to predict hotter than normal temperatures east of the Mississippi. This weather forecast will likely keep upward pressure on energy prices for now.
On the natural gas side, analysts were surprised to see natural gas prices drop this week. This price decline happened in one day which was yesterday. Analysts say it was a technical drop created by speculators. This price decline was not expected to continue. In fact, with the 8-14 day forecast calling for hot weather, we can expect some upward pressure on gas prices.