The declines took the market by surprise, helping to push Nymex prices up to $3.50/MMBtu. Only a few weeks ago, prices traded below $3/MMBtu. The “bomb cyclone” that hit the eastern half of the U.S. in the beginning of January led to record levels of consumption. On January 1, total gas consumption in the U.S. hit an all-time single-day high. Still, prices only climbed modestly.
But another round of cold weather is in store, and the consistent declines in inventories for several consecutive weeks has drained U.S. gas storage. New forecasts show cold weather sweeping the country from the Midwest down to Texas and eastward. “The concern is in February, deliverability gets even more constrained versus the January event,” Joel Stier, a trader at StierBull Trading LLC, told The Wall Street Journal.
With inventories already drained from earlier this month, the buffer is getting rather thin. “Storage is low — precariously low,” Bill Perkins, who runs Skylar Capital Management LP, told the WSJ.