Happy New Year to all!
Due to the holidays, this report period covers fourteen days instead of the usual seven days. During this period, the 12 month average price for natural gas on the NYMEX fell 1.5%. The 12 month average price for peak power on the PJM rose 2% this week.
Electricity and natural gas prices will close 2011 at beautiful levels. Natural gas prices are trading near the nine-year low and electricity prices are trading near an eight-year low.
Energy prices dropped to these low levels during 2011 because energy demand was weak and supplies were robust. The one big supply story that kept downward pressure on prices in 2011 was the discovery and recovery of shale gas in Pennsylvania, West Virginia and New York state. With the introduction of shale gas, the natural gas storage levels were able to surpass the record levels set in December 2009.
This year was great for low natural gas and electricity prices. However, the coldest months of the new year, January and February, are on the horizon. Stay tuned. Natural gas and electricity are two of the most volatile commodities. But for now, we are thankful for low prices.