Last week, the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) fell 1% and the 12-month average price for peak power on the PJM also fell 1%. This week, on the other hand, we experienced some price volatility. For this seven-day report period, the average 12-month price for natural gas on the NYMEX rose 5% and the 12-month average price for peak power on the PJM rose 2%.
First, the energy markets reacted to a decrease in normal natural gas production in the Gulf of Mexico. Off-shore drilling rigs in the Gulf were shut in last week in preparation for tropical storm Karen.
In a second weather-related development, the National Weather Service is forecasting the first autumn cold snap for the Northeast region during the third week in October.
The natural gas storage fields closed 1.6% above the five-year average after this week's injection of 90 Bcf, but are still 3.7% lower compared to levels this time last year. Traditionally, the injection season runs from April 1st through October 31st. So, we have a few more weeks left for injections to help provide sufficient supply for the winter demand season.
At this point, supply and demand levels hang in the balance depending on what the winter season has in store for us. However, energy prices are still at their second lowest levels in 10 years. This is a good time to start evaluating your renewal options before the cold weather arrives.