As I reviewed two energy news weeklies from Constellation NewEnergy and UGI, I thought it might be worthwhile to look back at gas prices at this time last year.
The NYMEX settlement price has fallen about 25% from one year ago. The settlement price for December contracts finished at $8.318 on November 28, 2006. Just 12 months earlier, the December settlement had exploded to $11.18 per mmBtu.
Fifteen days later, on December 13, 2005, the strip price for January hit an all time high of $15.78/mmBtu, before settling at $15.378. Speculators were claiming prices might break $20 per mmBTU by February settlement. Fortunately, January, 2006 turned out to be the warmest January in U.S. history. Winter’s back was broken. Since then, the lack of hurricanes coupled with a relatively mild summer in 2006, has led to our present situation of historic natural gas storage. If the winter temperatures are warmer than average, as some continue to predict, we will have a huge surplus of natural gas in storage come spring. If this happens, we might see NYMEX natural gas prices slip under $5 per mmBtu in the spring.
