There were no big winners or losers this week. The bulls and the bears wrestled to a stalemate. Natural gas and electricity prices literally rose one day but closed lower the next. This trade off happened all week. At the end of this seven day report period, the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) rose 0.7% and the 12-month average price for peak power on the PJM also rose less than 1%.
This week the marketplace received both good news and bad news. Thus energy prices were unable to sustain any big increases or decreases. Here are a couple of news stories that kept prices flat this week.
First, the 8-14 day weather forecast from the National Oceanic and Atmospheric Administration (NOAA) predicted colder than normal temperatures west of the Mississippi. Cold weather can place upward pressure on prices. However NOAAH also predicted warmer than normal temperatures east of the Mississippi which can place downward pressure on prices. The cold weather news neutralized the warm weather news.
Second, the other news story that sent mixed signals to the marketplace came from the Energy Information Administration (EIA). In their weekly natural gas storage report EIA reported the largest withdrawal of the season. As a result of this large withdrawal, we are no longer running a surplus to last year. This type of news can place upward pressure on prices. However, the same report showed that we have plenty of gas in storage to get us through the winter. The natural gas storage fields are 4.6% above the five-year average. This type of news can place downward pressure on prices. These storage positions sent mixed signals to the marketplace. The year-to-year deficit was neutralized by the fact that we are still 4.6% above the five year average.
Winter temperatures and storage reports continue to influence the near-term direction of energy prices. Stay tuned.