The Bulls and the Bears wrestled to a tie this week as one news story placed upward pressure on energy prices while another headline placed downward pressure on prices. For this seven-day report period the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) rose less than 1% and the 12-month average price for peak power on the PJM fell by less than 1%.
Early in the week energy prices dropped because of warmer-than-normal temperatures in most of the country. At that point, it looked like we were going to experience a second consecutive week of falling prices.
However, yesterday (Thursday, January 10) energy prices rose as the Energy Information Administration (EIA) reported a larger-than-expected natural gas withdrawal from storage. EIA reported a withdrawal of 201 Bcf, which was the largest withdrawal since February 2011. As a result of this news, the year-to-year surplus dropped to a deficit. Storages are now 2.6% below last year's levels.
Weather, of course, is a big variable that impacts energy prices. While December 2012 was the 10th warmest December on record, it is too early to tell what type of winter we will experience. We are only halfway through the traditional heating season, which runs from November 1 to March 31.
The updated weather forecast from the National Oceanic and Atmospheric Administration (NOAA) is calling for colder-than-normal temperatures east of the Mississippi next week. Cold weather tends to place upward pressure on energy prices. Stay tuned.