Due to the Thanksgiving holiday, we did not publish last week's Energy Update. As a result, this issue covers the past two weeks instead of the usual seven-day report period.

For this fourteen-day report period, the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) fell 2.5% and the 12-month average price for peak power on the PJM fell 3%.

This week's price decline was tied to the 10-day weather forecast which called for warmer-than-normal temperatures, and the natural gas storage report which included a surprise injection into the natural gas storage fields.

On the weather front, the National Oceanic and Atmospheric Administration (NOAA) released their 6-10 day weather forecast which predicted above-average temperatures in every state except Florida. This news placed downward pressure on both natural gas and electricity prices.

Are we seeing a pattern? When NOAA releases a forecast calling for colder-than-normal temperatures in most of the country, energy prices seem to inch upward. On the other hand, when NOAA releases a forecast calling for warmer than normal temperatures, energy prices seem to fall.

On the storage side of the equation, the Energy Information Administration (EIA) reported a big surprise. We saw an injection of 4 Bcf. Analysts were expecting a gas withdrawal of 9 Bcf to 13 Bcf. The five-year average withdrawal for this time of year was 18 Bcf. Analysts attributed the surprise gas injection to the mild weather and the Thanksgiving holiday.

Winter temperatures and storage reports are two variables that can influence the near-term direction of energy prices. Unfortunately, the weather is one variable that is difficult to predict.