Spring Scorcher Has U.S. Northeast Burning Most Gas in 4 Years
(Bloomberg) -- Blistering heat in the middle of spring is poised to volley power plants’ demand for natural gas in the U.S. Northeast to the highest in at least four years.
Temperatures in New York City’s Central Park reached 90 degrees Fahrenheit (32 Celsius) on Wednesday, tying a record set in 2001, and they could hit that mark again Thursday, according to the National Weather Service. As the hot spell persists, generators stretching from Maine to Virginia and Ohio may burn 7.38 billion cubic feet of gas on Thursday, up 28 percent from a week earlier, based on Bloomberg New Energy Finance projections.
Gas prices have been stuck in a narrow range for weeks as traders weigh a growing stockpile shortfall against record production. Inventories of the fuel are 29 percent below average after an unusually cold April, and a blazing summer could limit the amount of gas added to underground storage over the next few months, sending prices soaring.
Another sign that the U.S. is set for a bullish summer: The annual shift from so-called heating-degree days to cooling-degree days is hitting sooner than usual because of this recent blast of warm weather.
Traders watch these degree days closely -- as a means of measuring the energy demand it’ll take to keep homes and businesses at a comfortable 65 degrees. In a typical year, cooling days don’t surpass heating days until around May 22. This year, the switch is coming “well ahead of schedule,” said Bradley Harvey, lead forecaster at Radiant Solutions.
Radiant is projecting an unusually high number of cooling days as the atmosphere above the Pacific still shows the influence of a fading La Nina driving up temperatures across the U.S.
Shale output may not be able to keep pace with the upcoming spike in power demand, according to BNEF analyst Shunondo Basu. Government data will probably show below-normal storage gains over the next two weekly reports, he said.
“Producers are expecting to produce more to inject more” into storage and trim the supply deficit, Basu said. “They might not be able to do that if it’s a hot summer.”
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