In the Northeast, prices rose above $10 per MMBtu at certain markets as high local demand resulted in pipeline constraints. The spot natural gas price at the Transco Zone 6 trading point in New York City was highly volatile, peaking during the report week at $10.12 per MMBtu for delivery on Thursday, January 27, before falling below $7 on Tuesday, February 1. On the week, the price at Transco Z6 increased $0.73 per MMBtu, following a sharp increase yesterday. In the western portions of the Northeast, price gains were significantly less on the week, and the sharp price spikes seen in New York and elsewhere did not occur. The spot price at Dominion South in western Pennsylvania settled at $5.10 per MMBtu yesterday, higher on the week by $0.47. The stark difference in intraregional prices resulted from pipeline constraints between western and eastern portions of the region. Short-duration price spikes related to pipeline constraints in the winter have been fairly common in New York City and New England. However, almost 4 Bcf per day of new pipeline capacity is targeted to enter service before November 2011, in large part to move more gas from the new shale wells in the Marcellus play to downstream markets.
The general increase in prices this week likely reflected continuing strength in demand during the report week. Compared with the prior Wednesday, natural gas consumption yesterday was 11 percent higher, according to BENTEK, which monitors flows on the pipeline grid to arrive at daily estimates of supply and demand. U.S. natural gas consumption increased to 103 Bcf per day as of yesterday. Combined consumption in the residential and commercial sectors increased 10.7 percent, and was well above 50 Bcf for most of the days of the report week. In the electric power sector, increased demand for electricity for heating purposes, primarily in the Southwest, contributed to a 28.6 percent increase in natural gas consumption relative to the prior Wednesday. Overall, U.S. demand was 1 percent higher than the comparable period in 2010, according to BENTEK.
U.S. production during the report week, which averaged close to 62 Bcf per day, was lower on the week, likely owing in part to well freeze-offs in the Rockies and Southwest. BENTEK reported at least 600 million cubic feet (MMcf) per day of reduced production in Texas alone. In addition to the lower U.S. production for the week, Canadian imports dropped to an average of 8.0 Bcf per day, nearly 3 percent lower than the previous week. Nonetheless, U.S. production continued to provide a context of abundance to current supplies, averaging 5.7 percent higher than the comparable period last year, according to BENTEK.