Last week we saw natural gas prices on the New York Mercantile Exchange (NYMEX) drop 12.9% while power prices on the PJM fell 9%. For this seven-day report period, the market closed relatively flat. The average 12-month price for natural gas on NYMEX rose less than 1% closing at $0.356/therm while the 12-month average price for peak power on the PJM also rose less than 1%.
There were no major news stories to rattle the markets this week. Apparently, analysts have already factored in the news that natural gas production is at an all-time high and energy demand for December is expected to be slightly lower than normal, as most forecasters are predicting a mild December.
Since it was a slow news week, let's look at some interesting facts.
According to EIA, natural gas production reached an all-time high in 2013. Now, as we near the end of 2014, we continue to set single day production records. Shale gas gets most of the credit for the spike in our natural gas supplies. In fact, shale gas is now the country's largest source of natural gas. The shale gas boom is the biggest reason that both natural gas and electricity prices are trading at today's low levels.
Another interesting fact relates to crude oil. Did you see that crude oil prices dropped below $60 per barrel? This was the lowest price posted in five years. According to the USA Today, "the slide came after Saudi Arabia, the world's No. 2 oil producer after the U.S., suggested it would not cut production to prop up prices." Some analysts believe oil prices may continue to drop. This recent price drop is a welcomed gift to most consumers.
Although it was a slow news week, it was a good week for most energy budgets as oil prices, natural gas prices and electricity prices all traded at relatively low levels. However, don't be lulled to sleep. Winter does not officially start until December 21st.