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Natural Gas Dips Despite Soaring Demand Amid Deep Freeze

Summary:
Natural gas futures are tumbling on Thursday after the US government reported a smaller-than-expected decline in domestic inventories. The move in natural gas prices comes as the bitter gold has imposed itself in many parts of the US and Canada, leading to record-high demand for the energy commodity. March natural gas futures slipped %excerpt%.035, or 1.25%, to .81 per million British thermal units (btu) at 16:00 GMT on Thursday on the New York Mercantile Exchange. Natural gas has wiped out all of its gains in 2018, and it is already poised for a weekly loss of more than 6%. According to the US Energy Information Administration (EIA), domestic supplies of natural gas declined by 173 billion cubic feet for the week ending January 25, which is close in line with the median estimate of 197 billion

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Natural gas futures are tumbling on Thursday after the US government reported a smaller-than-expected decline in domestic inventories. The move in natural gas prices comes as the bitter gold has imposed itself in many parts of the US and Canada, leading to record-high demand for the energy commodity.

March natural gas futures slipped $0.035, or 1.25%, to $2.81 per million British thermal units (btu) at 16:00 GMT on Thursday on the New York Mercantile Exchange. Natural gas has wiped out all of its gains in 2018, and it is already poised for a weekly loss of more than 6%.

According to the US Energy Information Administration (EIA), domestic supplies of natural gas declined by 173 billion cubic feet for the week ending January 25, which is close in line with the median estimate of 197 billion cubic feet. In total, natural gas stockpiles stand at 2.197 trillion cubic feet, down 14 billion cubic feet from the same time a year ago. They are also 328 billion cubic feet below the five-year average.

In recent days, an Arctic-like freeze has blanketed half of the US, leading experts to project that US homes and businesses will use record amounts of natural gas for heating. The deep freeze has been so bad that mail carriers have temporarily ceased their deliveries, many offices have closed, and residents are bearing the cold by staying indoors.

While demand for natural gas will climb to an all-time high, there are concerns about supplies. Analysts are sounding the alarm about the frigid temperatures reducing production because freeze-offs – when water and other liquids freeze and block the flow of gas – are impacting output levels in Ohio, Pennsylvania, and West Virginia.

The latest data has shown that production has already fallen 0.9 billion cubic feet per day to 85.8 billion cubic feet.

The cold is so bad that General Motors announced that it is stopping production at 15 factories in Michigan. Ford and Fiat Chrysler have also confirmed that they have reduced operations to limit gas consumption until Friday because of limited supplies of natural gas. Michigan residents have been asked to cut back in their gas usage due to short supplies.

It is unclear as to when operations will return to normal, says GM spokesman Dan Flores.

We’re taking this shift-by-shift, location-by-location, and staying in close contact with Consumers Energy.

In other energy commodities, March West Texas Intermediate (WTI) crude oil futures rose $0.94, or 1.71%, to $55.17 per barrel. March Brent crude futures tacked on $0.43, or 0.7%, to $62.08 a barrel. March gasoline futures were flat at $1.40 a gallon. March heating oil futures jumped $0.015, or 0.83%, to $1.91 per gallon.

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Andrew Moran
I am a full-time professional writer. Prior to my self-employment, I worked as a reporter for Digital Journal covering the politics beat and The Toronto Times reporting on the city’s entertainment scene. I currently write mostly about business, marketing and finance

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