Winter Storm Sends US Spot Gas Soaring
A fierce winter storm characterized by a rapid drop in barometric pressure – a 'bomb cyclone' – hit the US Northeast on January 4, bringing high winds and heavy snow and pushing spot natural gas prices to triple-digit highs.
In New York City, Bloomberg quoted Consolidated Edison saying spot intra-day prices at the citygate soared to $175/mn Btu, while the US Energy Information Administration (EIA), in its 'Today in Energy' report for January 5, said spot prices in New York City averaged $140.25/mn Btu on January 4, a 170% increase from the day before.
The high gas prices also pushed electricity prices sharply higher, with the EIA reporting a price of $247.30/MWh in New York City and more than $260/MWh in other Mid-Atlantic states.
Although the big Northeast gas markets sit in the back yard of one of the biggest shale gas resources in the US, the lack of adequate pipeline capacity to move Appalachian supplies to consumers means those markets also experience the highest gas prices in the continental US.
Prompt-month Nymex Henry Hub gas futures, by comparison, were actually off 4.8% on January 4, at $2.88/mn Btu. US price benchmark Henry Hub is located in Louisiana, far to the south of the affected area. European spot prices remain soft too, with Britain's benchmark NBP closing a touch over -- and the Dutch gas hub TTF a tad under -- $7/mn Btu for day ahead gas in closing trade both January 4 and 5.
The bomb cyclone hit as much of the US Eastern Seaboard was already dealing with bitter cold, from North Carolina through to New England. The cold, the EIA said, had already contributed to record US gas demand of 150.7bn ft3 on January 1, surpassing the previous single-day record of 143.3bn ft3 set on January 7, 2014.
“Although residential and commercial natural gas consumption did not appear to surpass previous records, higher consumption in the electric power and industrial sectors, greater exports of natural gas to Mexico, and more demand for liquefied natural gas (LNG) feedstock gas contributed to the recent record demand level,” the EIA said.