The year's "shoulder season" has come with a small, but welcomed price decline on the natural gas side and some sideways price movements on the PJM power side. From September 2, 2014 to October 23, 2014 natural gas prices fell 4.8% while electricity prices traded flat.
During this short time period, there has been little opportunity for prices to rise because supply is high and demand is low. On the supply side, as noted by the U.S.Energy Information Administration, "there has been robust gas production all year with several records being set in 2014. Bentek Energy reported new highs accomplished this past week- both a single day record of 70.5 Bcf/d this past Sunday and a new weekly record average of 69.7 Bcf/d." Natural gas production is at an all-time high .
On the demand side, we are still operating within the shoulder season which unofficially runs from September 1st to October 31st. During this period you can expect minimal demand for either heating or cooling, which is exactly what we are experiencing. With minimal demand requirements in place, energy prices have been unable to sustain any upward momentum.
However, winter is on the way. As soon as the first cold snap hits, you are likely to see some upward pressure on energy prices. Is this the calm before the storm?