Although natural gas and electricity prices had declined during the two weeks prior to this seven-day period, it was a short-lived trend. For this report period, the 12-month average price for natural gas on the NYMEX rose 4.63%, while the 12-month average price for peak power on the PJM remained flat compared to the previous week.
This week the market seemed to focus on the natural gas storage report. The market did not like the fact that the natural gas storage surplus shrunk for the seventh week in a row. Even though storage levels are still high for this time of year, the surplus is shrinking. Eight weeks ago, storage fields were 58% above the five-year average. This week storage levels are 29% above the five-year average. All eyes are on the shrinking storage bubble.
Another variable that is getting attention this week is the natural gas rig count. The natural gas rotary rig count dropped for the sixth time in seven weeks. There are only 565 natural gas rotary rigs in operation today. This is the lowest active rig count since 1999.
Some big questions remain. How much will the drop in the rotary rig count affect supplies? Will the gas storage bubble continue to shrink? We won't know the answers until mid-August when the electric power plants begin operating at full speed.