(Adds analysis from S&P and LNG imports from EIA)
Jan 5 (Reuters) - Spot natural gas in the U.S. Northeast soared to all-time highs for Friday, the coldest day of an extended freeze, after a massive snowstorm battered the East Coast.
Gas futures, however, failed to follow next-day prices higher as forecasts for less cold weather later in January and record production depressed prices for the rest of 2018.
A powerful blizzard slammed the U.S. Northeast on Thursday, knocking out power for tens of thousands.
Temperatures in New York City have remained below freezing since the day after Christmas and were expected to drop to their lowest on Friday and Saturday, with the mercury reaching only 15 and 12 degrees Fahrenheit (-9 and -11 Celsius), respectively, according to AccuWeather meteorologists.
After this weekend, Northeast temperatures were expected to 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.
S&P Global estimated gas demand in New England and New York City would be about 9.1 billion cubic feet (bcf) on Friday, up from 9 bcf on Thursday. New York City’s typical daily gas use at this time of year is around 4 bcf.
One bcf of gas is enough fuel for about 5 million U.S. homes.
To meet demand, New York and New England were relying on already constrained pipelines and liquefied natural gas (LNG) imports.
LNG import facilities in the region were expected to deliver about 2.0 bcf of gas on Friday, the U.S. Energy Information Administration said in a report. It noted that Repsol SA’s Canaport LNG terminal in New Brunswick, Canada, received a cargo on Tuesday and that Engie SA’s Everett LNG terminal in Boston might receive a cargo on Friday.
Analysts at Barclays said the lack of movement along the back of the futures curve was likely the result of a widely held belief that production growth will keep the market well supplied in 2018.
“We think the curve will soon need to play catch up,” the analysts noted. The bank expects prices at the Henry Hub benchmark to average $3.19/mmBtu in 2018 versus the current futures strip for the balance of the year of $2.73.
Record gas prices caused power in New England E-NEPLMHP-IDX to rise to its highest since January 2014.
Gas prices soared because supplies in the U.S. Northeast are constrained by limited pipeline capacity.
On a normal day, pipelines can 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. That limited supply boosts prices generators have to pay for gas so they instead burn oil 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. (Reporting by Scott DiSavino; Editing by Steve Orlofsky and Tom Brown)