Natural gas is the dog that got its day in the New Year trading at $175/MMBtu spot in New York.
Less than a month ago, Gas Exporting Countries Forum expected lower natural gas prices“over the next two decades” due to a surge in supplies from unconventional sources supplies from unconventional.
With the sever winter storm hitting much of the North America, temperatures have been tumbling since the start of the New Year. Meteorologists dubbed this arctic winter storm “bomb cyclone” because of the extreme drops in pressure over a short period of time. This unusual freezing cold weather has also had a major impact on U.S. commodity markets, natural gas, in particular.
Not Even Texas Can Stay Above Freezing
CNN reported that on New Year’s Day, temperatures across 90% of the United States didn’t even get up to 32 degrees. In Texas, cities like Dallas have seen lows below freezing during the recent Arctic blast. Weather forecast says by Friday some parts of the U.S. Northeast could “feel as cold as 30 degrees below zero. This frigid cold snap is sending increase in heating demand and an uptick in the price of natural gas.
World’s Most Expensive Natural Gas
Natural Gas Intelligence reported yesterday that natural gas spot price traded as high as $175/MMBtu in New York City where NYMEX futures have been averaging below $3/MMBtu.
Data as ofJan. 5, 2018 am
This price disparity underscores the inadequate energy infrastructure at the U.S. Northeast region. The current gas transporting capacity is not enough to haul gas from gas producing basins to meet the sudden spike of heating demand in the region. Bloomberg reported that gas in Northeast region is the world’s priciest, commanding 14 times more than U.K. futures price and about nine times more expensive than Asian LNG imports.
Gas Well Freeze-offs
The freezing temperature is also causing headaches for the producers due to gas well freeze-offs. Freeze-off is an industry term describing a phenomenon where gas wells become frozen shut due to a severe drop in temperatures.
Leave A Comment