The previous week, natural gas had been trending upward before a bearish end to the week slowed the price climb, and saw it settle at $4.18/MMBtu. However this week seemed even more bleak, seeing prices fall to near monthly lows due to the impending weather forecast. Several meteorologist have called for the beginning of June to be a below average month, temperature wise that is. This past week we saw prices dropping as much as .10 cents to around $4.08/MMBtu at one point in the week. The reasoning behind this drop is that with abnormally low temperatures the need for NG would again be minimal. The market did end up recovering from some of the past weeks loses. The futures contract for June, which is expiring, is currently seeing a price around $4.11/MMBtu. The July contract, which is currently being traded, began trading at $4.18/MMBtu . Although this contract has already seen prices fall. Storage continues to see injections, especially in the Eastern part of the U.S.. Injections this past week totalled 88 bcf for a total 2141 bcf in storage. Despite the growth from week to week in the amount, last year’s figure of 2805 bcf continues to dwarf the current amount. Storage is slightly below the 5 year average of 2229 bcf but still within the historical range for the past 5 years.
Crude Oil, which started the month (June contract) with so much promise, ended up continuing its fall. From averaging over $110/barrel to now averaging around just under $93/barrel. What could have caused this drastic change in such a promising market? According to several industry specialist the market is being affected by the Fed, which can only cause prices to continue to fall. According to an article written by Mark Shenk, the president of Schork Group Inc offered this opinion, “Bernake is a bigger determinant of what happens in the oil market than OPEC.” Bernake currently serves as the chairman of the Federal Reserve, and has said recently that the Fed will continue to cut spending as the economy continues to strengthen. The futures contract currently being traded is around $93.5/barrel. This represents an increase from this time last year when the price per barrel was trading around $90.86.
Commercial Electricity Rates
ERCOT- Texas continues to have a large spread between rates, with some in the state receiving rates around .026 cents. Others parts of the state saw rates around .043 cents. The ERCOT continues to see the largest spread in prices due to the vastness of the state.
NYISO- The New York market has seen rates range from as low as .046 cents to .063 cents. This showed an increase from the previous week in which rates were .01 cents lower.
MISO- This market showed rates anywhere from .03 to .05 cents.
PJM – The Pennsylvania area showed an increase from the previous week. Rates for this week began around .043 cents to .052 cents.
This past Memorial day provided cooler than normal temperatures across the nation. Temperatures are expected to rise 2 – 6 degrees over the upcoming weekend in much of the Southwest and Northeastern part of the country. The South is expected to see temperatures remain similar to this past weekend. Begining next week, the Midwest and East coast should experience cooler temperatures. These regions should expect a change of -2 degrees, which could provide some relief to the air conditioning unit. However, the West is expected to experience warmer temperatures than normal, with some areas in seeing an increase anywhere from 6-10 degrees.
News In the Market
That time of month is upon us again, and the July contract for NG is now on the table. We had learned from the previous month of June that despite being in the midst of peak air conditioning season, prices continue to be lower than once assumed. With temperatures forecasted at the beginning of June to be significantly lower than normal, many speculators have bet on a lower air conditioning need. This signaled a restraint on the early season cooling. The temperatures expected have not been shown to be hot enough to require a high demand this early in the season. This had caused the June contract fall, especially in the previous weeks. The market continues to be speculative based on current temperatures and monitoring the NG market.
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