There’s no sign yet of a pause in the dramatic rally in natural gas prices across the central U.S., where spot rates have now breached the $1,000 mark, more than 100 times their level just a week earlier.
Prices for immediate delivery are skyrocketing as consumers scramble to find additional supply. U.S. production has fallen to a four-year low.
In contrast, the much more liquid futures market in New York is only up slightly for the week. The lack of significant price action there suggests traders view the impact of the arctic conditions as a relatively short-lived event.
Supply for next-day delivery at the Oneok Gas Transportation hub in Oklahoma traded at $1,250 per million British thermal units on Wednesday, according to David Hoy, a trader at Dynasty Power in Calgary. That’s up from $999 on Tuesday, and just $9 a week ago.
At the Henry Hub in Louisiana, the delivery benchmark for futures in New York, spot gas traded at $20 or higher on Wednesday morning, according to two traders. That compares with a settlement of $16.13 on Tuesday and just $3.73 a week ago.
Gas production has plummeted as frigid weather triggers blackouts and causes liquids to freeze inside pipes, forcing wells and processing plants to shut. The cold blast has also disrupted liquefied natural gas exports as terminals take units offline to reduce their power and gas demand in response to emergency declarations.
Gas for March delivery on Nymex was down 0.9% at $3.101 per million BTU at 11:14 a.m. in New York.