Natural gas advanced on Tuesday as short-term weather forecasts continued to call for cold temperatures in many densely-populated US areas, boosting demand for the power-station fuel as Americans crank up the heating.
On the New York Mercantile Exchange, natural gas for delivery in February increased by 0.59% to $4.332 per million British thermal units by 12:42 GMT. Prices shifted in a daily range between $4.349 and $4.310 per mBtu. The energy source declined 0.4% in the last 5-day period, after losing 1.9% in the previous week. However, prices settled last year 26% higher, the best performance since 2005 and second straight annual advance.
Continuing cold weather for the next few days
NatGasWeather.com reported on Tuesday that the Arctic blast has already swept across the eastern US and after bringing record-breaking cold temperatures this morning, temperatures will start to gradually warm over the coming days. However, high temperatures across the Midwest will hardly reach -5°F to 0°F during the net few days, while the Northeast will see only single digits and teens.
According to the website, natural gas and energy demand will be extremely high for another couple of days, before temperatures gradually warm to more reasonable levels.
As the cold pushes off the East cost and retreats toward Canada from Wednesday to Friday, the temperatures will gradually modify. By the weekend, a system of low pressure will build into the central US, leading to significant warming, while easing natural gas and heating demand.
NatGasWeather.coms extended forecasts show the period of milder weather conditions will give way to a new fairly cold blast around January 14th. Cold air is expected to push through the Rockies and then into the Plains and eastern US the following days. Freezing temperatures and snowfall could again push deep into the southern US, including northern Texas and the Tennessee Valley. The cold outbreak won’t be as impressive as the outbreak during this week, but some chilly temperatures might be expected, which would again lead to a period of above normal natural gas and heating demand for much of the central and eastern US.
According to AccuWeather.com, readings in Augusta will bottom at 5 degrees Fahrenheit on January 9th, 6 below usual, while the low in Chicago will hit 9 degrees, below the average of 18 degrees. Temperatures in Detroit are expected to fall to 20 degrees Fahrenheit, 5 below normal.
When cold weather is expected, natural gas surges as increased electricity demand to power air-conditioning calls for more supply of the fuel, which is used for a quarter of U.S. electricity generation. Above-average readings in the winter season have the opposite effect. Consumption usually picks up from November through March. According to the Energy Information Administration, power generation accounts for 32% of U.S. gas demand and 49% of U.S. households use the energy source for heating.
EIAs weekly US gas inventories report
The Energy Information Administration reported on Friday the first below-average decline in US natural gas inventories in five weeks. Supplies fell by 97 billion cubic feet in the week ended December 27, short of expectations for a decline of 126 bcf. This was below the five-year average drop of 121 billion cubic feet and less than last year’s 126 bcf withdrawal during the comparable period.
Total gas held in underground storage hubs equaled 2.974 trillion cubic feet as of December 27th, 15.9% below last year’s 3.536 trillion stored. The deficit to the five-year average narrowed to 8.9% from the preceding week’s record 9.2%.
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