Note: This issue of Energy Update is publishing today because our offices were closed on Friday, November 11 for Veterans Day.
During the period of October 14 to November 4, 2011, natural gas and electricity prices were relatively flat. However, last week prices fell. The 12 month average price for natural gas on the NYMEX fell 3.5%, and the 12 month average price for peak power on the PJM fell 1.8%.
Weak energy demand may explain the price decreases. The sluggish economic reports and warm weather forecasts placed downward pressure on natural gas and electricity prices last week. The weather forecasters are calling for warmer than normal temperatures east of the Mississippi for the next 8-14 days.
On the supply side, the end of the traditional injection season arrived on October 31. We are heading into this winter with ample supplies — 3.8 Bcf in storage, which is just 16 Bcf or .4% shy of the all-time record high set in October 2010.
For now, prices are very attractive. How much lower can prices go? This is still a good time to look at the early renewal strategy.