NEW YORK: US natural gas futures bounced on Wednesday to a more than three-month high, extending its rally to a third session as a cold snap continued to wreak havoc on the energy industry and fuel soaring demand for heating.
Front-month gas futures rose 16.1 cents, or 5.2, to $3.290 per million British thermal units as of 12:50 p.m EST, shaking off initial declines, which analysts attributed to forecasts suggesting a likely reprieve from the deep freeze, next week.
Prices jumped over 10% on Tuesday to hit a high since Nov. 3 at $3.214.
“The current cold snap is expected to take a heavy toll on amount of gas available now and also down the road,” said Zhen Zhu, economist at Oklahoma City-based C.H. Guernsey.
“The spike in the consumption coupled with the continued decline in production makes the gas market tighter than before.”
Unusually freezing weather is likely to wreak havoc on US oil and gas production for several days, if not weeks, according to industry experts, as companies deal with frozen equipment and a lack of power to run operations.
The deep freeze left millions without power along the US Gulf Coast, causing power prices to surge, especially in Texas - the country’s biggest oil and natural gas producer. Next-day power for Wednesday at the ERCOT North hub, which includes the cities of Dallas and Fort Worth, spiked to a record of $8,800 per MWh, a nearly six-fold jump from $1,490 on Tuesday.
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