This week has been a similar story to the last as far as the price of natural gas goes. The commodity is on course for a second straight week of gains, as frigid weather conditions drive demand against a backdrop of ever-dwindling US supplies.
Gas futures surged to a five-year high of $6.40 per million British Thermal Units (BTUs) yesterday, after the Energy Information Administration (EIA), the reporting arm of the US Energy Department, revealed another large drop in the US stockpile.
Natural gas in storage in the US plunged 250 billion cubic feet last week to 1.443 trillion cubic feet, following a 237 billion drop the week prior. US supplies of natural gas have declined to their lowest in a decade as Americans have upped their usage, heating their homes against a succession of winter storms. Close to half of American homes use natural gas as their fuel for heating.
Gas futures for March pushed above $6.300 per million BTUs earlier today, before slipping back to $6.080 by mid-afternoon in New York, up 0.53% on the day. Forecasts suggest weather patterns may remain constant into next week, offering little respite to the inventory issue, which should act to support the gas price.
January was the coldest start to the year for the US since 2001, according to the National Oceanic and Atmospheric Administration. The EIA now forecasts inventories will finish this heating season down at 1331 billion cubic feet, the lowest end-of-season level since 2008.