For this seven day report period, energy prices fell again. The 12 month average price for natural gas on the NYMEX fell 7% and the 12 month average price for peak power on the PJM fell 7.4% this week.
The lack of any significant cold weather is the main story. Locally, November was 20% warmer than normal and December is also looking warmer than normal. Thanks to these above normal temperatures, the natural gas storage levels are operating at unusually high levels because less natural gas is being withdrawn to meet the country's heating demands. The natural storage surplus, relative to past years, continues to grow. This week, the year-to-year surplus grew from 2.7% to 4.3%. The surplus over the five year average grew from 8.7% to 10%.
Thanks to weak demand, high storage levels, and the emergence of shale gas, natural gas prices are trading near a nine year low and electricity prices are trading near an eight year low. This is a beautiful time to look at the early renewal strategy.
The coldest months of the year, January and February, are on the horizon. The onset of unusually cold temperatures could draw storage levels back to normal and could place some upward pressure on prices.