Spot natural gas in the U.S. Northeast soared to all-time highs for Friday, the coldest day of an extended freeze, as a massive snowstorm battered the East Coast.
A powerful blizzard slammed the U.S. Northeast on Thursday, knocking out power for tens of thousands of people.
Temperatures in New York City have remained below freezing since the day after Christmas and are expected to fall to their lowest on Friday and Saturday when the mercury will only reach 15 and 12 degrees F (-9 and -11 C), respectively, according to AccuWeather meteorologists.
After this weekend, however, the meteorologists said, Northeast temperatures will return to seasonal levels with highs in New York hitting a normal 38 degrees for much of next week.
Next-day gas prices in New York City <NG-CG-NY-SNL> reached a record $140.25 per million British thermal units (mmBtu), according to data from brokerage firm SNL going back to 1992. The prior high was $120.75 set during the polar vortex in January 2014.
Spot gas in New England soared to a record $82.75/mmBtu, according to data going back to 1995. The prior high was $77.60 in January 2014.
In 2017, next-day gas prices averaged $3.08/mmBtu in New York and $3.80/mmBtu in New England.
The spike in gas prices caused power prices in New England <E-NEPLMHP-IDX> to rise to their highest since January 2014.
Gas prices soared because supplies in New York and New England are constrained by limited pipeline capacity.
On a normal day, pipelines transport more than enough fuel to supply commercial and residential customers and power plants with cheap fuel.
But on the coldest winter days, when consumers use most of the gas to heat homes and businesses, little is left for power plants to burn. That limited supply boosts gas prices generators have to pay for gas so they instead burn oil in their units if they can.
In New England, about 36 percent of the region's power plants were burning oil on Friday, while only 17 percent used gas.
On average in 2016, gas accounted for 49 percent of New England's power generation, while oil accounted
for just 1 percent.
In New York, about 29 percent of the state's power plants were burning oil on Friday and just 18 percent gas.
The high prices came as demand for gas for heating in the lower 48 U.S. states hit an all-time high of 141.7 billion cubic feet per day on Jan. 1, according to Reuters data.
Total consumption, which includes rising exports via pipeline and liquefied natural gas
, was expected to near the record high again on Friday, the data showed.
One bcfd is enough gas to fuel about 5 million U.S. homes.
At the same time demand jumped to new highs, the cold weather cut gas production by as much as 8 percent this week by freezing wells in shale basins across the country.
Production fell to around 71.1 bcfd on Jan. 1 from a record high of 77.5 bcfd on Dec. 26, Reuters data showed. Output has since recovered a bit to a projected 72.7 bcfd on Friday.
Reporting by Scott DiSavino