This week, all eyes have been focused on Hurricane Irene and the recent earthquake that hit the Eastern Seaboard. The market place did not overreact to either of these occurrences. The Bulls and the Bears wrestled to a draw. For this seven day report period, the 12 month average price for natural gas on the NYMEX and the 12 month average price for peak power on the PJM closed at levels that were almost identical to last week's prices.
One reason prices remained flat was that analysts were not sure how Hurricane Irene would impact energy demand. It is likely that energy demand will drop dramatically if Hurricane Irene causes widespread power outages across the Eastern Seaboard. A loss of demand could place downward pressure on energy prices next week.
Another variable that was written about this week raised a question about the natural gas supply component going into the future. The U.S. Geological Survey published an estimate that said the Marcellus shale formation contained only 84 TCF of recoverable natural gas. On the other hand, the Energy Information Administration (EIA) had been quoted as saying there was 410 TCF of natural gas recoverable in this formation. If the market place discovers that there is less recoverable gas than originally predicted by EIA, this news could place upward pressure on energy prices.
As you already know, many variables influence the direction of energy prices. Most of these variables are difficult to predict, which is why natural gas and electricity prices are some of the most volatile commodity prices in the world. For now, the good news is that natural gas and electricity prices are still trading near a seven year low.