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RPT-U.S. natgas prices collapse thanks to record warm winter
March 1, 2017 / 8:00 PM / 7 months ago

RPT-U.S. natgas prices collapse thanks to record warm winter

 (Repeats to additional subscribers)
    By Scott DiSavino
    March 1 (Reuters) - U.S. natural gas prices have fallen 30 percent since the start of the
year as demand this winter fell to the lowest in four years due to the warmest weather on record
in December, January and February.
    Those low prices, however, may not last long since the low rates have already prompted power
companies that can burn either gas or coal to generate more electricity with gas.
    Since the start of the year, gas futures have collapsed by 30 percent to around
$2.774 per million British thermal units from a two-year high of $3.994 on Dec. 28.
    Futures averaged $3.58 per mmBtu in December 2016, $3.29 in January 2017 and $2.91 in
February 2017, compared with $2.04 in December 2015, $2.23 in January 2016 and $1.93 in February
2016.
    Even though gas was almost 60 percent more expensive this winter than last year due to lower
production and rising exports, analysts said the power sector could boost its use of the fuel to
the record high levels seen in 2016 if prices continue their recent downward spiral.

    "The lower prices of late ... are already beginning to stimulate power generation demand ...
We think power generation this summer could end up with only a small loss, or even a slight
gain, over last year," Martin King, director institutional research at GMP FirstEnergy in
Calgary, said in a note.
    Gas consumption by the four biggest users of gas - residential, commercial, industrial and
power - fell to an average of 82.8 billion cubic feet per day (bcfd) from December 2016 to
February 2017, its lowest level since the winter of 2012-2013, the data showed.
    Over the past four winters, gas consumed by those big users reached 84.8 bcfd during the
warm winter of 2015-2016, 89.8 bcfd during the second 'polar vortex' winter of 2014-2015, a
record high 91.4 bcfd during the first polar vortex winter of 2013-2014 and 81.1 bcfd during the
warm winter in 2012-2013, Thomson Reuters data showed.
    Gas-weighted heating degree days (HDDs), a measure used to estimate demand to heat homes and
businesses, totaled 2,107 from December-February, according to Thomson Reuters data.
    That compared with 2,124 during the same period in 2015-2016, a 10-year average of 2,440 and
a 30-year average of 2,390, the data showed.
    HDDs measure the number of degrees a day's average temperature is below 65 Fahrenheit (18
Celsius).
    Meteorologists at the U.S. National Oceanic and Atmospheric Administration (NOAA) said the
winter of 2015-2016 was the warmest on record in the contiguous U.S. states, according to data
going back to 1895. NOAA has not yet released its final results for the winter of 2016-2017.
    The United States is not alone in experiencing warm weather. Around the world, annual
temperatures have increased in most years since the late 1970s, with eight of the past 10 years
being the warmest on record, according to U.S. climate data.
    
 U.S. Heating Degree Days from Thomson Reuters data
                    Dec        Jan       Feb    Total 
 1980-1981                     961       676       
 1981-1982          831       1059       773     2664
 1982-1983          690        859       681     2230
 1983-1984          1007       994       653     2654
 1984-1985          698       1060       797     2555
 1985-1986          958        839       717     2514
 1986-1987          787        901       679     2367
 1987-1988          760        981       788     2529
 1988-1989          812        761       839     2411
 1989-1990          1042       702       634     2378
 1990-1991          798        910       609     2317
 1991-1992          741        826       629     2196
 1992-1993          801        844       796     2442
 1993-1994          794       1000       785     2579
 1994-1995          707        821       715     2244
 1995-1996          850        929       746     2525
 1996-1997          751        923       661     2335
 1997-1998          803        750       607     2159
 1998-1999          732        845       620     2197
 1999-2000          751        867       630     2248
 2000-2001          1009       916       717     2642
 2001-2002          699        769       667     2134
 2002-2003          801        938       803     2542
 2003-2004          775        968       779     2522
 2004-2005          792        856       653     2301
 2005-2006          862        663       717     2243
 2006-2007          688        846       832     2366
 2007-2008          797        901       765     2463
 2008-2009          854        961       690     2505
 2009-2010          897        947       810     2654
 2010-2011          893        975       751     2619
 2011-2012          724        772       653     2150
 2012-2013          703        846       743     2291
 2013-2014          867       1004       832     2704
 2014-2015          716        910       897     2523
 2015-2016          586        878       660     2124
 2016-2017          803        770       534     2107
 
 (Reporting by Scott DiSavino; Editing by James Dalgleish)
  
 
 

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