Last week, the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) fell 4.4% and the 12-month average price for peak power on the PJM fell 1.2%. This week, we saw another price drop, but it was a very small one. The average 12-month price for natural gas on the NYMEX fell 1% and the 12-month average price for peak power on the PJM fell 1%.
We expected a bigger price drop after the U.S. Energy Information Administration reported a huge natural gas injection during their Thursday morning storage update. This week's injection number was 101 Bcf. This was only the second time this year that we've recorded a triple-digit injection. The natural gas storage fields closed 1.4% above the five-year average after this week's injection. This news placed some downward pressure on energy prices.
This large gas injection might well have sparked a bigger price drop this week if not for the tropical storm advisory released by the National Weather Service. Reports came in that a new tropical storm, Karen, was forming in the Gulf of Mexico. Projections for the storm showed it heading directly for Louisiana, Mississippi and Alabama. This raised concerns that the storm would cause the "shut-in" of some of the off-shore gas rigs, which would place upward pressure on energy prices.
The two reports neutralized each other and, as a result, energy prices closed relatively flat this week. But stay tuned. Moderate temperatures are projected to continue east of the Mississippi for the next week. As a result, we may see another large gas injection.