Residential and commercial natural gas consumption is almost exclusively used for heating, so colder weather brings increased consumption. Last year’s record warm winter led to relatively low consumption in January and February 2012, the coldest months of the year. While this winter’s heating season (November through March) began with relatively low natural gas use, particularly during the warm December 2012, consumption has increased with colder temperatures in 2013.
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Last January, residential and commercial consumption averaged 41.8 billion cubic feet per day (Bcf/d), according to BENTEK Energy LLC (Bentek) estimates. The five-year average (2008-2012) for January is 49.2 Bcf/d. This January, consumption averaged 47.0 Bcf/d, with a few instances of very cold temperatures leading to spikes in use. This month’s Short-Term Energy Outlook projects that residential and commercial consumption will remain above last year’s levels through the rest of the heating season, based on continued projected colder temperatures relative to last year’s unusually warm winter.
A return to cold temperatures drove prices back up in the Northeast. Prices at the Algonquin Citygate trading location, which serves Boston, and the Transcontinental Pipeline’s Zone 6 New York delivery point (Transco Zone 6 NY), which serves New York City, closed trading on Wednesday, January 30, at $7.42 per MMBtu and $3.99 per MMBtu, respectively. This represented a large decrease from their respective peaks last report week of $34.59 per MMBtu and $37.07 per MMBtu. However, the dip in prices at these two points proved to be temporary, as cold temperatures returned in the Northeast. By the close of trading on Friday, February 1, the Algonquin Citygate spot price was back above $30 per MMBtu and the Transco Zone 6 NY spot price was $13.28 (after reaching almost $14 per MMBtu at the close of trading the day prior). Although prices at these two market locations moderated somewhat by the end of the report week, they were well above their week-ago closing price, with Algonquin Citygate closing trading yesterday at $22.63 per MMBtu and Transco Zone 6 NY closing at $11.74 per MMBtu.
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Prices at most other points rose to a lesser degree. Prices elsewhere in the United States rose at similar levels as the Henry Hub spot price, which increased by 17 cents per MMBtu or 5 percent at the close of trading yesterday compared to the final price for the previous Wednesday, January 30. Exceptions were in the Pacific Northwest, where prices at the Northwest Sumas traded down yesterday by 8 cents per MMBtu or 2.2 percent compared to last Wednesday, and the Midwest, where prices at the Chicago Citygate trading location traded down by 2 cents per MMBtu or 0.6 percent yesterday compared to last Wednesday.