The price of natural gas rocketed by almost 5% last week (19 December), taking it to the highest point it has reached in almost two-and-a-half years. Strong demand led to record volumes of gas being pulled from storage two weeks ago - and this is cited as one of the main factors driving the trend, the Wall Street Journal reports.
Indeed, harsh winter conditions arrived early in the US, which prompted a significant upswing in demand for natural gas as larger numbers of homes than expected started to turn up the heating.
For the week ending 13 December, the amount of gas in storage fell by 285bn cf, according to official reports from the Energy Information Administration - and it was noted that this represents the most gas ever removed from storage in a single week. Stocks are currently standing an estimated 7.4% below the five-year average for this time of year, which could be a similar record.
EIA analyst Amy Sweeney explained that the 7.4% figure is likely to be the largest drop compared with the historical level on records from her organisation, which begin in 1994. The production of natural gas in areas such as North Dakota, Texas and Oklahoma has been plagued by various problems recently, including frozen equipment, which has led to some stalling.
Aaron Calder, market analyst for Houston-based Gelber & Associates, noted that this has prompted power generators to use more stored supplies. 'This is some of the coldest temperatures that we've seen in 30, 40 years,' Mr Calder remarked.
Addison Armstrong, senior director of market research at brokerage firm Tradition Energy, warned that warmer weather in the future could send prices down, but downplayed production concerns.
'Production is very strong and is not slowing down,' he commented, adding: 'All of this demand we are seeing is short term and … weather related.'
Further information about gas prices and challenges and opportunities in global oil and gas finance will be covered during the 2014 IP Week programme.