(Rewrites top, adds analyst's quote, updates to settlement
By Jeanine Prezioso
NEW YORK Jan 7 U.S. natural gas prices ended
flat on Tuesday supported by frigid cold that boosted heating
demand but capped by forecasts for warmer temperatures by week's
end in major cities.
Gas prices traded higher for much of the session on Tuesday
as an arctic chill gripped most of the nation and triggered a
sharp increase in heating demand.
A mass of freezing air descended on the eastern two-thirds
of the country, pushing heating demand for natural gas to record
highs, filling pipelines to capacity and forcing electricity
providers to declare supply emergencies.
The U.S. was set to burn 131 billion cubic feet (bcf) of gas
on Tuesday, a record for a single day and about 30 percent more
than normal, eclipsing the record set on Monday, according to
Thomson Reuters Analytics.
Heating degree days, the difference between an average day's
temperature and 65 F (18 Celsius), which measure heating demand,
were 45.4, the most in at least five years, according to Thomson
Several gas pipeline operators warned customers of a pinch
in supply on Tuesday. Analysts pointed to gas freeze-offs that
caused a decline of about 1.5 bcf per day over the last day or
so in gas-producing regions across the U.S.
After frigid weather on Tuesday, temperatures were expected
to gradually rise into the 30s Fahrenheit (-6 Celsius) by week's
end in New York, Chicago and Minneapolis, according to
forecasters at AccuWeather.com, curbing some need for heating
demand. By Saturday a high of 51 F was expected in New York,
Front-month February natural gas futures prices on the New
York Mercantile Exchange ended virtually flat at $4.299
per million British thermal units (mmBtu), after rising to a
session high of $4.43.
"I think we're seeing a battle waged between those who think
seasonal demand will fall off at the end of month and those
focused on the cold today and the cold during the last four
weeks," said Gene McGillian, energy analyst with Tradition
Energy in Stamford, Connecticut.
Prices had earlier been buoyed by forecasts for another
possible record draw from underground storage next week, the
second inside a month. Traders focused on the fact that the
severe winter weather would put a dent in storage still early in
the winter season.
"The storage for next week is pretty impressive, it looks
like another record," said Ben Smith, president of consultancy
First Enercast in Denver.
U.S. stockpiles of natural gas fell by 285 bcf, a record
amount, in the second week of December.
Storage drawdowns of natural gas during the week to Jan. 3
will be released Thursday by the U.S. Energy Information
Administration. Early estimates from analysts ranged from a draw
of 140 bcf to 230 bcf. For the equivalent week last year, 191
bcf of gas were taken out of storage to meet demand and the
five-year average for that week is a 131 bcf draw.
While next-day gas prices in the Northeast fell from
Monday's 12-year high above $50 per million British thermal
units, they remained bolstered by the cold. Natural gas for
Wednesday delivery on the Transco pipeline at the New York
citygate E-TSCO6NY-IDX eased to $28 per mmBtu, on average, in
At Henry Hub GT-HH-IDX, the benchmark supply point in
Louisiana, gas rose 4 cents to $4.54 per mmBtu. Late
differentials were at a 25-cent premium to the futures price,
strengthening over Monday's premium of 20 cents.
Power prices meanwhile shot higher as grid operators
struggled to meet demand. Power prices in central U.S. markets
topped $1,500 per megawatt hour on Tuesday, far higher than
monthly averages of around $50 for this time of year.
PJM, the power grid agency for the mid-Atlantic and parts of
the Midwest, and Ercot, the Texas electricity grid operator,
urged customers to conserve power due to forecasts for high
heating demand as they both reached record demand for power.
Nuclear plant outages on Tuesday totaled 4,500 megawatts, or
about 5 percent of U.S. capacity, higher than Monday's total of
1,860 MW, also pressuring gas-fired units to run and replace
(Reporting by Jeanine Prezioso, Julia Edwards and Scott
DiSavino in New York.; Editing by Lisa Von Ahn, Edward
McAllister and Meredith Mazzilli)