Short-Term Price Benchmark Trends
The ERC national price benchmark for retail electricity in deregulated states remained unchanged last week at $0.0705 per kilowatt hour. Prices did flucturate slightly by state, with Pennsylvania (-2.37%) posting the greatest decline, and Texas (1.91%) posting the greatest increase.
The current weather outlook is for slightly cooler temperatures than previously expected. The National Oceanic and Atmospheric Administration six-to-ten day forecast is projecting below-normal temperatures over the middle of the U.S., with above-normal temperatures on both coasts. The eight-to-fourteen day forecast is projecting normal temperatures over the majority of the middle of the U.S., with above-normal temperatures over the coastal regions. This should result in one more week of natural gas storage withdrawals at the end of March.
Long-Term Price Benchmark Trends
The U.S. natural gas storage inventory is currently 58% above last year’s storage level. The U.S. Energy Information Adminstration expects supply to remain unchanged from last week’s level. Absent a major cold event later in March, it is increasing likely that a record-setting stock of 2.48 trillion cubic feet could represent the end of the storage withdrawal season.
With a huge supply surplus moving into the shoulder months, and sustained production levels, many observers anticipate a further reduction in natural gas prices to the $1.40-$1.50 range. Any drop in prices should be short lived, however, as the market is poised to respond with a buying surge.