For this seven-day report period, the mild weather placed downward pressure on energy prices for the third week in a row. This week, the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) fell 2% and the 12-month average price for peak power on the PJM fell 1%.
As you may recall, we experienced some hot weather from July 5-19, 2013. However, since that time period, temperatures have moderated and energy prices have fallen. Since July 19, the end of the hot spell, natural gas prices have fallen $.03 per therm or 8.6%. Electricity prices on the PJM have fallen 6%.
How did our recent cool weather place downward pressure on energy prices? Mild temperatures meant less natural gas was needed to fuel the electric generators. This meant more natural gas could be packed into the storage fields, creating a small storage surplus and placing downward pressure on energy prices.
For example, this week's storage injection was surprisingly high at 96 Bcf. It was the second largest injection ever recorded in August. These large injections have flipped the storage deficit into a small surplus. For the first time since March 22 of this year, natural gas inventories ended the week 1% above the five-year average.
According to the National Oceanic and Atmospheric Administration (NOAA), the mild weather for August is expected to continue east of the Mississippi for the next ten days. If mild temperatures persist, perhaps we can head into November with a natural gas storage surplus and low energy prices.