New York—Power and natural gas prices in the Northeast have seen spikes this week after winter storms in the region.
February prices in New England so far have soared significantly higher compared to last year around the same time as the winter storms that impacted the Northeast heavily affected power and natural gas pricing.Prices in Mass-Hub on-peak for Feb. 4 delivery trended about 329% higher than last year levels around the same time, Mass-Hub on-peak is currently pricing around $104.25/MWh, while last year it was pricing around $24.25/MWh. Off-peak packages also saw a spike, up about 428% compared to last year levels, from about $17.75/MWh to around $93.75/MWh.
On-peak prices for Feb. 3 delivery reached year-to-date highs, trading around $114.25/MWh; off-peak prices reached record highs as temperatures dipped to the teens on Jan. 31, when it traded around $87.25/MWh.
Overall, on-peak prices so far have trended 72.5% higher than last year, and off-peak prices have trended 77.7% higher as the Northeast has been impacted by much colder temperatures and increased precipitation this year.
According to the US National Weather Service, the average monthly January temperature in Boston this year was 7 degrees lower than last January, while overall snow, ice, and hail precipitation was 2.7 inches higher. Month to date, this February has already surpassed last February's precipitation levels; as of Feb. 3 precipitation has averaged 1.2 inches, while February 2020 overall averaged 0.5 inches.
Looking forward, the six- to 10-day outlook forecasts a strong probability of below average temperatures for the Northeast.
US Northeast spot gas prices remain liftedAs freezing temperatures are likely to persist throughout the week, demand centers like Boston saw continued strength for Feb. 4 flows, with Algonquin city-gates rising to $11.97/MMbtu in preliminary assessments, the highest level seen since December 2019. New York City demand hub also saw in increase for Feb. 4 flows, rising 21 cents to $8.07/MMbtu.
Total Northeast demand is expected by S&P Global Platts to fall slightly over Feb. 4-5 but pick back up and reach a high of 38.1 Bcf/d Feb. 9. With the sustained demand levels above 30 Bcf/d, prices are expected to be supported throughout the week.
Cooler temperatures bring record-breaking drawdownsAccording to Platts data, regional temperatures are forecast to average 31 degrees Fahrenheit through Feb. 6, about 2 F below normal, prior to temperatures dipping below 30 F once again between Feb. 7 through Feb. 13.
As demand is expected to remain elevated throughout the week and through mid-February, this could support the ongoing larger withdrawals from storage inventories in the Northeast region.
Dominion fell by 21 Bcf for the week ended Jan. 28, 6 Bcf higher than the five-year average draw and 4 Bcf higher than the previous five-year maximum, according to Platts Analytics.
Current inventories are 36 Bcf above the five-year average, but if forecasts hold strong through Feb. 4 there is a potential that the East region's surplus could reach lowest level since early last year.
