For the first time in four weeks, natural gas and electricity prices rose. For this seven day period the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) rose 3% and the 12-month average price for peak power on the PJM rose 2.8%.
Once again, all eyes were apparently focused on the weather forecast. As you may recall, we experienced mild temperatures from July 19 to August 8. The mild temperatures dampened energy demand. During that time period, natural gas prices fell $0.03 per therm -- or 8.6% -- and electricity prices on the PJM fell 6%.
However, this week the National Oceanic and Atmospheric Administration (NOAA) posted their new weather forecast for August 21-29, predicting an end to the mild temperatures. Most of the country is expected to experience above average temperatures at the end of August. This news placed upward pressure on energy prices.
Additionally, some tropical storms hit the weather maps this week. There was a small disturbance in the Gulf of Mexico and a tropical depression off the coast of Africa called Erin. These storms may have added fuel to this week's small price rally.
Even with this week's modest price increase, both natural gas and electricity prices are still trading at very low levels relative to the last 10 years.