Natural Gas Rises as Hot Weather Moves Across Northern U.S.
quote.bloomberg.com
04/15 12:44
By Bradley Keoun
New York, April 15 (Bloomberg) -- Natural gas surged more than 7 percent as a wave of unusually warm weather moved across the northern U.S., boosting demand from power plants that produce electricity for air conditioners.
High temperatures this week are expected to top 80 degrees Fahrenheit, or 27 degrees Celsius, in Chicago and New York, about 20 degrees above normal for this time of year, meteorologists said. Many nuclear plants are down for repairs, so higher demand will be met mostly by small, gas-fired plants that can be started quickly when power supplies are tight, traders said.
``You've got a heat wave coming across the northern U.S., and you've got a lot of baseload units off line,'' ABN Amro Inc. broker Mike Hiley said, referring to power plants that usually run at steady output and produce the bulk of the nation's power. ``So that's translating into more gas burn.''
Natural gas for May delivery rose as much as 24 cents, or 7.7 percent, to $3.365 per million British thermal units on the New York Mercantile Exchange. It was the biggest one-day increase for a most-active contract in two weeks.
Gas prices are still down 9 percent from the nine-month high of $3.70 per million Btu reached April 2.
Prices also got a boost from a rally in crude-oil prices, Hiley said. Venezuela President Hugo Chavez returned to power following a failed coup, raising expectations that the country will restrict production to increase prices.
Some electricity producers and manufacturers can burn gas instead of oil in their plants and factories when oil prices rise.
Output from nuclear power plants in the U.S. fell 1.7 percent to 78,933 megawatts, according to the Nuclear Regulatory Commission. That means about 79 percent of operating capacity was running, the lowest level since last May. Many plant operators plan maintenance in the spring because energy demand is usually low, analysts said.
Natural gas was used to generate 621.1 billion kilowatt-hours of electricity in the U.S. last year, or about 16 percent of the nation's total, according to U.S. Energy Department estimates. Nuclear plants accounted for 20 percent. |
