In last week's report we noted that the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) fell less than 1%, and that the 12-month average price for peak power on the PJM fell less than 1%. This week the Bulls tried to stage a rally, but it did not amount to much.
For this seven day report period, the average 12-month price for natural gas on the NYMEX rose 2% and the 12-month average price for peak power on the PJM rose 1.5%.
The big variable that spooked the market came from the Energy Information Administration's (EIA) natural gas storage report. The EIA reported one of the smallest gas injections of the summer. This week's injection was only 58 Bcf, the first time in seven weeks that the injection number fell below the five-year average.
Prices inched upward after the storage report was released. The small injection was a clear sign to the marketplace that hot summer temperatures had arrived and, as a result, natural gas supplies were being directed to the power plants instead of the storage fields.
The markets feared that hotter-than-normal temperatures would increase the natural gas storage deficit. The natural gas storage fields were already 1% below the five-year average.
However, the price rally was short-lived thanks to the weather forecast. According to the National Oceanic and Atmospheric Administration (NOAA), the 6 to10 day forecast calls for the return of normal temperatures east of the Mississippi.
Stay tuned. Summer temperatures will continue to be the biggest wild card during the next two months.