For the seventh time in eight weeks, energy prices climbed. During this seven-day report period the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) rose 5.2%. The 12-month average price for peak power on the PJM rose 3.9%.
You can easily argue that the recent price increases were fueled by the natural gas storage reports and the natural gas rig counts. Both reports would lead you to believe that the energy markets were no longer oversupplied.
On the natural gas storage front, the U.S. Energy Information Administration (EIA) reported our first injection of the refill season. However, the injection was below expectations. We saw an injection of 31 Bcf. The five-year average injection for this time period was 39 Bcf. We now have 32% less gas in storage than we did last year at this time. Even more concerning was the fact that storage levels were now 4.2% below the five-year average.
On the natural gas supply side, supplies leveled off because the rig counts are down. The recent Baker Hughes rig count reported that there were only 377 active natural gas rigs in the United States. Last year at this time, we had 624 active gas rigs. This means that the natural gas rig count was 39% below last year's levels.
These reports tend to spook the marketplace and place upward pressure on energy prices. The next wild card to watch is summer demand. The concern is that demand for natural gas may be higher this summer than last because more gas will be needed to refill the storage facilities. If we experience a hotter than normal summer, we may see more upward pressure on energy prices.