<<Gas in Cali? Lots of gas here.....whats the prob?
quote.bloomberg.com
12/06 16:24
Natural Gas Soars to Record on Forecast for Frigid U.S. Weather
By Bradley Keoun
New York, Dec. 6 (Bloomberg) -- Natural gas futures blew past a record high set just this week, surging as much as 19 percent on mounting concern that frigid weather will drain inventories of the heating fuel before the end of winter.
Soaring wholesale gas prices this year mean homeowners' costs will jump by 50 percent from last winter, the Energy Department said in a monthly report today. Industrial users such as DuPont Co. and Phelps Dodge Corp. have said the rally in gas hurt their third-quarter earnings.
``This market's out of control,'' said Sam Weaver, a gas trader with GSC Energy Corp. in Atlanta. ``People are buying on the weather,'' and the rally's not over yet, he said.
Natural gas for January delivery rose $1.101, or 15 percent, to close at $8.485 per million British thermal units on the New York Mercantile Exchange. Today was the first time in 10 years of natural gas futures trading that prices rose above $8.
Gas may reach $9.60 on Friday or Monday, Weaver said.
Prices during the session rose as much as 19 percent to $8.80 per million Btu, the highest price and biggest one-day gain in the contract's history.
There was ``total mayhem'' on the floor of the exchange today, said Eugene Croutier, a natural gas trader with Arb Oil Inc. ``This market wants to go to $10.''
Low temperatures overnight ranged from 10 degrees Fahrenheit (minus 12 Celsius) in Chicago to 17 below zero in Fargo, North Dakota, both well below normal for this time of year. An arctic air mass this weekend will bring even colder weather, forecasters said. The Midwest is the largest consuming region for gas as a home heating fuel.
``It looks like December is going to come out being much colder than normal, and that's very bullish for natural gas,'' said Kyle Cooper, an energy analyst with Salomon Smith Barney in Houston.
More Cold Weather
Prices have risen almost fourfold the past year and have been at or close to record highs since June on concern that inventories are too low to avoid spot shortages during the winter heating season, when demand peaks.
The weather now ``is a precursor, the baby, of a much stronger low pressure system that will enter the Rockies and western Plains during the late weekend,'' said Joel Burgio, a meteorologist at Weather Services Corp. of Lexington, Massachusetts. That weather ``will gradually sock most of the U.S.,'' he said.
Some forecasters now are saying that temperatures will stay below normal during the week of Dec. 18, Cooper said. Gas is used for 70 percent of home heating in the U.S., according to the Energy Department.
Higher Retail Prices
The department's report today said that retail gas prices this winter would be 40 percent higher than they were a year ago, averaging about $9.21 per million Btu. A colder winter than last season, which was the warmest on record, will contribute to higher heating bills, the department said.
The American Gas Association said in a weekly report today that natural gas inventories fell 2.9 percent in the week ended Dec. 1 to 2.43 trillion cubic feet. The decline left U.S. supplies down 17.2 percent from a year ago, wider than the 16.6 percent gap reported last week.
Today's decline of 73 billion cubic feet was smaller than the 90 billion forecast by analysts in a Bloomberg survey.
Inventories are the lowest they've been at this time of year since the AGA began tracking gas storage amounts in 1994.
Industrial Users
Rising use of gas by industrial users, benefiting from a robust U.S. economy, and by utilities has kept inventories from rising to normal pre-winter levels. Gas is the fuel of choice for new power generation, especially in regions where environmental laws discourage the use of nuclear, coal or petroleum-based fuels by utilities.
Supplies in the West are 26 percent lower than they were a year ago, the AGA said, and that's led to soaring prices in California. Shortages of gas were one reason state officials began a round of inspections of power plants today, as electricity reserves fell and power was cut off to some industrial users.
The Bloomberg average spot price for natural gas at four California border locations has risen sevenfold in the past month from $5.37 per million Btu to $37.75 today.
``Utilities in California are going to hurt big time,'' said Aaron Kildow, an energy analyst at Prudential Securities in New York. ``The problems there are chronic'' because power plant construction has not kept pace with demand, he said.
Cold weather and the rally in gas has helped prop up heating oil prices.
Heating oil for January delivery on the Nymex rose 3.52 cents, or 3.6 percent, to $1.0118 a gallon, a 50 percent increase from a year ago.
U.S. heating oil inventories are down 25 percent from a year ago, the American Petroleum Institute said late yesterday. Cold weather in the Northeast, where 80 percent of the fuel is consumed, is keeping demand strong, traders said.
Total Mayhem on the floor? LOL, sounds like my kind of market!<GGG> |
