Arctic weather causes natural gas prices to heat up


The freezing weather has caused spot prices for natural gas on the East Coast to soar to record highs, with gas at a trading hub in New Jersey surging to as high as $90 per million British thermal units yesterday from just $13.61/mmBtu on Friday. That compares with usual peaks of $40-50 when the temperatures get cold.

At two other hubs, prices hit $95/mmBtu.

Utilities are absorbing the costs at the moment, although they could pass the prices on to customers later in the year.

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Comments (9)
  • Jdeboer87
    , contributor
    Comments (334) | Send Message
     
    Can someone explain why this isn't impacting the general price of natural gas?b
    7 Jan 2014, 08:12 AM Reply Like
  • dannyboy_95
    , contributor
    Comments (39) | Send Message
     
    I'm with you J, in early Dec everyone was talking about the cold temps propelling Nat Gas prices upwards...now it appears it doesn't matter. There will be a massive draw down this week, but after that it looks as those temps will be warming up (at least in the Midwest) quite substantially at least for the next 7 days.
    7 Jan 2014, 09:07 AM Reply Like
  • jtom
    , contributor
    Comments (312) | Send Message
     
    Check the day-by-day, 45-day forecast for your area on the Accuweather site (accuweather.com. Enter your zip code, click on extended forecast.). You will likely see several cold snaps after next week, with the majority of the next six weeks having below normal temps. If you do check, please let me know if what I said is true for your location. Thanks.
    7 Jan 2014, 10:12 AM Reply Like
  • dannyboy_95
    , contributor
    Comments (39) | Send Message
     
    Jtom, it appears to be around average for the next couple weeks in my area. In the 45 day there were 18 days above average 23 days below average and 4 right on. I wouldn't call anything a significant deep freeze though and almost all below average days were within 10 degrees of the average. I'm not sure how accurate a 45-day outlook can be so hopefully we get more below average days!
    7 Jan 2014, 10:30 AM Reply Like
  • 1GreatCFA
    , contributor
    Comments (1362) | Send Message
     
    Haven't checked but my guess would be a ton of new supply hit the market. My own personal feeling on Nat gas stocks here would be to use this seasonal strength to reach for the exits. Unless you own an unconventional producer with great execution.
    7 Jan 2014, 08:29 AM Reply Like
  • jtom
    , contributor
    Comments (312) | Send Message
     
    I would agree with you for the long run, but some NG producers have been forced to reduce operations due to the cold temps. Could be a while to ramp up production, restore inventory, and start increasing supplies.
    7 Jan 2014, 10:15 AM Reply Like
  • User 353732
    , contributor
    Comments (5166) | Send Message
     
    These transient spikes have no impact on field prices because they represent the very temporary monetization of logistical choke points. Only sustained cold, icy, weather has an appreciable effect on field prices both by reducing production and by increasing use.
    7 Jan 2014, 08:44 AM Reply Like
  • lcrupp
    , contributor
    Comments (104) | Send Message
     
    Most natural gas is sold under long-term contract , at fixed prices. A sudden surge in spot prices has little effect on power companies cost of fuel.
    7 Jan 2014, 08:49 AM Reply Like
  • will will
    , contributor
    Comments (26) | Send Message
     
    At those prices why generate electricity with natural gas? Turn off the gas fired units and sell any fixed price supply on the spot market. Electricity can be bought from the Grid. Plenty of cheap coal is available.
    7 Jan 2014, 09:15 AM Reply Like
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