Business electricity prices continue to hold at support with Natural Gas (NGOCT 10) closing yesterday, down 4.6 cents to $3.76 / mmbtu on the Nymex Henry Hub. Between August 26 and Sept 10, we have traded in a range between $3.95 and $3.69.
Yesterday saw storage come about where we expected it to at net injection of 58 BCF. This continuation of 12 weeks of supply contraction was not enough to spark a move to the upside. The downward trend remains in place, as you can see in the chart. The 50 day is still trading below the 200 day moving average, and there is really no indication that the market is going to break one way or another as we close out the week.
We are seeing lots of commercial and industrial clients shore up electricity renewals out beyond 2012 while prices remain depressed. With the natural gas to coal parity considerations, this feels like smart move at this time. A break out over $4 may signal a missed opportunity. Locking in electricity rates with NG at any where close to $3.75 looks like a very safe bet, particularly if you have an immediate start.