The winter storm that covered much of the United States this week did little to move natural gas prices, a sign of ample supply of the resource, an energy analyst said Tuesday.
Natural gas futures prices saw minimal movement in the past two days and fell Tuesday after forecasts of milder weather later in the week.
Natural gas for February delivery dropped 0.7 cent to settle at $4.29 per million British thermal units on the New York Mercantile Exchange.
“We can have a very mild winter and gas prices fall below $2 [per million Btu],” said Andrew Coleman, an analyst with Raymond James & Associates. “And here we are having a very cold winter and prices are still at $4.20.”
He said little movement in natural gas prices shows that there is “more gas out into the system.”
“This is just reflecting that yes, it’s cold but there’s an expectation in the market that we can deliver gas to those who need it,” Coleman said.
While natural gas futures did not move much because of the cold temperatures, the next-day delivery price rocketed above $90 per million Btu in the Northeast on Monday, said Samantha Santa Maria, managing editor of Platts, a research firm.
By Tuesday, prices for next day delivery had fallen by as much as $37 per million Btu in some areas, she said.
“It’s starting to shrug it off,” Santa Maria said. “I think people see that this cold is a short-term event.”
The average price of next day delivery for natural gas in Arkansas and surrounding areas stayed within the $4.40 per million Btu range.
Next-day natural gas prices spiked earlier this week in the Northeast because of concerns about the capacity of pipelines carrying the resource, said Sam Andrus, director of North American Natural Gas at IHS CERA, an energy analysis firm.
Natural gas prices tend to swing upwards during the winter because of a rise in demand, but how big of an increase the market sees depends on the weather forecast, said James Sullivan, senior analyst for Alembic Global Advisors
“Weather in the winter usually drives volatility in the prices,” he said. “There’s always a big draw on inventories this time of year.”
Energy analysts said it will be week or so before they know how much natural gas was consumed because of the winter storm.
About one-half of American households use natural gas as their primary heating fuel, according to the U.S. Energy Information Administration.
The administration plans to release its weekly report Thursday detailing how much natural gas is in storage.
Bloomberg News said analysts it surveyed expect natural gas inventories fell 151 billion cubic feet in the week that ended Friday, an increase from an average withdrawal of 131 billion cubic feet.
Business, Pages 25 on 01/08/2014