For the second week in a row, prices closed relatively flat. For this seven-day report period, the average 12-month price for natural gas on the New York Mercantile Exchange (NYMEX) rose 2% closing at $0.394/therm while the 12-month average price for peak power on the PJM rose 1%.
Although we saw a nice price drop over the summer, prices have been trading in a relatively tight range over the last few weeks. This summer, from June 2, 2014 to September 2, 2014, natural gas prices fell 13% and peak power prices on the PJM fell 11%. Over the last three weeks, however, electric prices rose 3% and natural gas prices closed at $.39/therm which replicated the closing price we saw on September 2, 2014.
All eyes are on the weather forecasts. If we have mild temperatures over the next seven weeks, the industry should be able to refill the natural gas caverns before November 1. The prospect of heading into the winter with full storages would likely keep a lid on energy prices for the short term.
However, if we have an early cold snap, we could experience problems getting the caverns filled by the November 1st target date. As you may recall, the natural gas storage fields are still 13% below the five-year average. If cold temperatures arrive early and slow the refill process, we could see upward pressure on energy prices.
Winter is on the way. If you want to protect your budget from the price spikes that come with a cold winter, this is a good time to look at your renewal strategy.