US natgas rises on power demand concerns: press
US spot natural gas prices hit new 13-year highs on May 3, Bloomberg reported, on growing concerns that available supplies will be insufficient to meet summer power generation demand.
By late morning, the front month June contract on the New York Mercantile Exchange (NYMEX) had broken above $8/mn Btu to reach $8.134/mn Btu, up nearly 9% from the May 2 close. In noon hour trading, June retreated below $8.
US natural gas prices are normally relatively benign in the spring and early summer, with spikes usually associated with mid-winter deep freezes which raise demand and could limit supply, or the late summer/early autumn hurricane season in the Gulf of Mexico, which brings potential supply threats.
But now, Bloomberg reported, a post-Covid demand bump, the gas crisis in Europe and a lack of response from US shale gas drillers have combined to push prices higher.
“We have seen domestic demand for power and industrial sectors continue to grow despite much higher natural gas prices,” Alan Armstrong, CEO at pipeline operator Williams, said in a conference call discussing Q1 financial results. “It has been somewhat surprising to us how inelastic this demand has remained.”