This is the third week in a row that natural gas and electricity prices closed relatively flat compared to the previous week's numbers. For this seven-day report period, the 12-month average price for natural gas on the NYMEX rose 1% and the 12-month average price for peak power on the PJM fell 1%.
Is this the bottom? The noteworthy story this week is the big difference between crude oil prices and natural gas prices. Natural gas prices are trading near a ten-year low while crude oil prices are trading at extremely high levels. Crude oil prices closed at $102 per barrel this week and are not expected to drop anytime soon.
As a result of this huge price disparity, energy producers are shifting their focus away from the natural gas wells to the oil wells. The active rig count for natural gas has fallen 23% since Oct. 14, 2011. However, according to the Energy Information Administration, the oil rig count has increased by 57% since last year.
As producers "shut-in" their gas wells and shift their focus to the oil play, we may begin to see some upward pressure on natural gas and electricity prices. Stay tuned. For now, natural gas and electricity prices continue trading at very attractive levels.