Commentary from Bentek Energy Director of Energy Analysis Jack Weixel:
Platts oil and gas analytics unit, Bentek Energy, said that natural gas demand hit yet another milestone on Tuesday as the U.S. endured another day of subzero weather. Gas delivered to consumers across the U.S. on Tuesday hit 134.3 Bcf/d – supplanting Monday's short lived record demand mark of 130.4 Bcf/d. The increase in demand was most notable in the Northeast where residential and commercial demand jumped 30% from the prior day. Bentek Director of Energy Analysis, Jack Weixel, said that natural gas use for consumers is up across the board, regardless of weather, and that big temperature swings in the future will cause the same result. "You've got this massive supply source in the Marcellus, about 300 miles west of major New York and Mid-Atlantic market places, and prices of natural gas nationally have moderated considerably over the past five years, so utilities are leaning on the fuel as a go-to fuel source," said Mr. Weixel. "When cold strikes and more people are connected to the system, you have more systemic gas demand, so it becomes a pipeline capacity issue." The lack of pipeline capacity into New York could be responsible for the massive spot price increases seen in day ahead trading for Tuesday. Platts price data indicates that day ahead prices for gas delivered on Wednesday have decreased dramatically as demand is forecast to ease. Mr. Weixel concluded by saying that 'this is not the last time we'll see these big daily spikes in price, probably not the last time this winter, or at least until more capacity is built to serve an increasing customer base."
Platts Natural Gas Alert article which ran on Monday 1/7/14:
NE US SPOT NATURAL GAS PRICES FALL NEARLY $37/MMBTU ON WARMER WEATHER
Houston (Platts)--7Jan2014/1019 am EST/1519 GMT
Some spot natural gas prices in the US Northeast fell nearly $37/MMBtu
Tuesday, with forecasts calling for warmer temperatures Wednesday following a
bout of extremely cold weather.
Transcontinental Gas Pipeline Zone 6 non-New York sank $36.80 to average
in the lower $35.00s/MMBtu on IntercontinentalExchange, after hitting a new
all-time high Monday.
Transco Zone 6 New York dropped $20.79 to average in the lower
$32.10s/MMBtu, narrowing its discount to non-New York to $2.90 from $18.91
Monday.
Texas Eastern M3 dropped $25.26 to average in the lower $15.00s/MMBtu.
Algonquin Gas Transmission dropped $7 to average in the lower
$26.50s/MMBtu, with Tennessee Gas Pipe Line Zone 6-200 leg down $6.35 to
average in the upper $27.60s/MMBtu.
Iroquois Gas Transmission, receipts dropped $17.62 to average in the
mid-$19.00s/MMBtu, with Iroquois Zone 2 down $14.63 to average in the lower
$23.10s/MMbtu.
Other Northeast prices were mixed, with production region points up as
much as $1.30 as multiple pipeline companies posted notices restricting
secondary nominations amid the record demand seen Monday.
A mass of cold air swept into the northern US Monday, bringing wind
chills down to the minus 40s Fahrenheit from western New York to Wisconsin,
boosting spot natural gas prices to record highs in Monday trading.
By Wednesday, high temperatures below zero will be virtually gone from
the lower 48 states, said a report from The Weather Channel. By Thursday,
highs in the teens, 20s, or 30s will come to the Great Lakes and northeast
areas, the report said.
Washington was forecast to have a high of 27 F Wednesday following a high
of 14 F Tuesday. New York will see a high of 27 F, following a high of 13 F
Tuesday.
Platts unit Bentek Energy projected total northeast load to drop to 34.4
Bcf Wednesday, from 38.9 Bcf Tuesday.
Monday's Platts-Bentek's Gas Daily Market Fundamentals:
Demand surges to new record high of 134 Bcf/d
Demand continues to surge to 134.3 Bcf/d, breaking the record of 130.4 Bcf/d
set Monday, as frigid temperatures expand eastward.
The day-on-day gain can be attributed primarily to an 10.3-Bcf/d strengthening in Northeast
residential/commercial demand, which rose to 28.8 Bcf/d from 18.5 Bcf/d.
Total Midwest demand remains strong, falling only 2 Bcf/d to 31.3 Bcf/d, which
still ranks as the fourth-highest level since 2005.
The cold snap will start to taper off starting Wednesday, providing relief to the Midwest and Northeast
and likely pushing total demand below 100 Bcf/d by Friday. Production is up
roughly 0.3 Bcf/d, with a rebound of nearly 0.5 Bcf/d in the Fayetteville
basin, after its production was revised 0.7 Bcf/d lower in Monday's I2 cycle,
indicating possible freeze-offs.
