Natural gas prices in the U.S. climbed above US$8 per million British thermal units, hitting a fresh 13-year high, on growing concern that stockpiles of the power-plant fuel will fall short of demand this summer.
The current rally is unusual in that past U.S. price spikes tended to be triggered by bone-chilling weather that boosted demand, or by Gulf of Mexico hurricanes that slashed supplies. Normally at this time of the year, North American weather is so benign that utilities, manufacturers and brokers have no trouble stowing ample volumes of gas in storage caverns for use later in the year.
But the combination of the post-pandemic consumption bump, soaring overseas demand and a muted output response from domestic shale drillers is driving price escalation.
“We have seen domestic demand for power and industrial sectors continue to grow despite much higher natural gas prices,” Alan Armstrong, chief executive officer of pipeline operator Williams Cos., said Tuesday in a conference call with analysts. “It has been somewhat surprising to us how inelastic this demand has remained.”
Prices
- U.S. gas for June delivery rose 8.5 per cent to US$8.11/mmbtu at 10:20 a.m. New York time
- Prices earlier rose to US$8.169, highest since Sept. 2008
