Cold weather blanketing much of the United States and Canada this week boosted spot natural gas prices on Friday to their highest levels since last winter in several regions and helped push US futures to a near two-year high. Front-month gas futures rose as high as $3.68 per million British thermal units (mmBtu), their highest since December 2016, because the latest weather forecasts pointed to even colder weather next week than the frigid temperatures projected a few days ago.
Traders said that cold next week will force US utilities to start withdrawing gas from storage caverns that are already around 16 percent below normal for this time of year, prompting concerns of possible gas shortages in some parts of the country later this winter.
Next-day prices for Friday rose to their highest since January at the Henry Hub benchmark in Louisiana, Dominion South in Pennsylvania and the Chicago citygate. In Canada, meanwhile, next-day prices at the AECO hub in Alberta rose to its highest in 21 months.
Next-day gas at the Henry Hub held at $3.54/mmBtu due to cold weather nationally and as demand at nearby liquefied natural gas (LNG) export terminals rose to new highs with the start of new liquefaction trains.
Cheniere Energy Inc expects new liquefaction trains at its LNG export terminals in Sabine Pass in Louisiana and Corpus Christi in Texas to enter service in the near future.
Next-day prices at the Dominion South hub rose to $3.41/mmBtu, their highest since January for a third day in a row, with the cold weather and as more pipelines entered service in recent weeks, allowing gas trapped in the Marcellus and Utica shale to flow to the Midwest and Gulf Coast regions where prices are higher.
The new pipes, including Rover, Atlantic Sunrise, Nexus and Mountaineer, have enabled drillers to boost production in Appalachia and the country as a whole to record highs.
In Canada, next-day prices at the AECO hub rose to $3.03/mmBtu, their highest since January 2017 for a second day in a row after unusually cold weather blanketed much of the province for the past four days. Temperatures in Calgary, the biggest city in Alberta, remained below 30 degrees Fahrenheit (minus 1 Celsius) over the past four days, according to AccuWeather. The normal high in the city at this time of year is 41 F.
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