Sub-zero temperatures in much of the United States have frozen gas wells, leading to the drop in production to the lowest in 11 months, Reuters has reported, citing local data.
The report added that demand for electricity, on the other hand, was heading for a record-high in some states, notably Texas.
There, the grid regulator had to issue a conservation call for Monday morning on expectations that demand will break last summer’s record.
“Operating reserves are expected to be low Monday morning due to continued freezing temperatures, record-breaking demand, unseasonably low wind,” ERCOT said in the call.
Demand for electricity in the state with the biggest gas output and the largest wind generation capacity is seen reaching 85.56 GW on Tuesday, according to federal energy data, cited by Reuters. Supply, meanwhile, could fall short of that by 1 GW, ERCOT has estimated.
Reuters also cited data from LSEG, its market research unit, which suggested demand for natural gas in the U.S., including for exports, could hit 164.6 billion cu ft today, rising further to 171.9 billion cu ft on Tuesday. Both figures would be record-breaking.
Output, meanwhile, has fallen in North Dakota, according to the state’s Pipeline Authority. The authority reported that gas production was down by between 700 and 800 million cu ft daily, while oil production had declined by some 250,000-280,000 barrels daily.
As a result of these developments, gas prices are soaring. Per Bloomberg, citing unnamed trading sources, the Henry Hub spot price surged by 400% last Friday, hitting $17 per million British thermal units. This compares with $3 per mmBtu for the most traded futures contract for February delivery, the report noted.
The stage appears set for a potential repeat of the winter of 2021 that left hundreds of thousands of people without power for an extended period of time, with Texas bearing the brunt of the freeze.
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