Natural gas demand sets new record Jan. 1 in wake of cold weather

U.S. natural gas demand set a single-day record of 150.7 billion cubic feet on Jan. 1, surpassing a previous record of 143.3 billion cubic feet set Jan. 7, 2014, according to estimates from PointLogic. Heating demand has increased across the United States as a result of colder-than-normal temperatures, and natural gas provides for much of heating, according to the U.S. Energy Information Administration.

Residential and commercial consumption of natural gas didn’t surpass previous records, but it played a part in the recent record demand level, according to the EIA. Other contributors to the record demand level included higher consumption in the electric power and industrial sectors, increased exports of natural gas to Mexico and higher demand for liquefied natural gas (LNG) feedstock gas.

Natural gas demand is usually higher in the winter as residential and commercial demand for heating fuels rises. Industrial sector demand is less seasonal but higher in the winter. The electric power sector uses the most natural gas in the summer when electricity demand is the greatest. But for many homes and businesses, they use electricity as the primary or secondary heating source, and natural gas-fired generators are often used to meet increased electricity demand.

This week, increased demand led to price increases for natural gas and electricity. “Day-ahead natural gas prices for delivery for Jan. 1, 2018, neared $30 per million British thermal units at trading locations in the Mid-Atlantic region, New York and Boston,” according to Natural Gas Intelligence. “Because the spot price of natural gas affects power prices in many parts of the United States, spot wholesale electricity prices also rose, surpassing $200 per megawatt hour (MWh) in New York City and $185/MWh in New England,” according to data from SNL Energy.

Increased demand is expected to reduce storage levels of natural gas as changes in storage levels are often correlated with temperature changes. As of Dec. 29, storage levels were 3.126 trillion cubic feet or about 6% less than the five-year average and at the same time in 2016, according to the EIA.