Bloomberg
Big Freeze sends gas upwards while the Arctic Grip becomes firmer
(Bloomberg) – The arctic frost in the central US is expected to worsen, further increasing pressure on energy prices, which were already trading at unprecedented levels over the long holiday weekend. Natural gas hit a record $ 600 per million British thermal units in Oklahoma. Temperatures fell so far below projections in parts of the central and western US that physical gas prices rose from California to the Rocky Mountains. A hub in Cheyenne, Wyoming, hit up to $ 350 per mmBtu because the information is not public, according to traders who refused to be identified. Heating and power plant fuel traded up to $ 195 per mmBtu in Southern California. If the electricity prices on the previous day are signs of this and the weather forecasts are sometimes even accurate, the rise in energy prices is not over yet. In Texas, where temperatures in Dallas are expected to drop as low as 4 degrees Fahrenheit (minus 16 Celsius), spot prices for electricity are expected to hit the grid cap of $ 9,000 per megawatt hour on Monday and Tuesday. The state’s electric grid operator is urging people to conserve energy as the need for heat taxes on the electrical system increases. “It’s a pretty brutal mass of air,” said Bob Oravec, senior branch forecaster at the US Weather Prediction Center. “The cold air is anchored in the central part of the country. High temperatures are amazingly cold and around 50 degrees below average. “The US has 797 daily cold temperature records, according to the National Centers for Environmental Information. By early Sunday, the coldest location in the US was 25 miles east of Ely, Minnesota, where readings had dropped to -50 degrees Fahrenheit. By 7 a.m. in New York, 2,653 flights in the US had been canceled by Monday, most in Dallas and Houston, according to FlightAware, an airline tracking service. Huge increase in wholesale output for Sunday delivery was between $ 3,000 and $ 7,000 per year megawatt-hours in some locations, tripling the records set in some locations on Saturday, and a staggering 2,672% increase over Friday at the West Hub in Texas. According to Bloomberg, the average spot electricity prices during rush hours on Sunday mornings were just under $ 1,000 per megawatt hour. “Spot prices are expected to hit $ 9,000 on both Monday and Tuesday,” said Brian Lavertu, a trader for Active Power Investments. “The stream will be wild until Tuesday.” Traders said they had never seen an electricity trade on the Texas power grid for thousands of dollars over such a long period of time. They made comparisons between this week’s price hikes and the Midwest’s 1998 records and the California energy crisis that skyrocketed electricity prices two decades ago and darkened hundreds of thousands of homes and businesses. Among the other markets that are evolving the cold: Gas in Chicago reached $ 220 per mmBtu, traders said. Physical gas cost up to $ 300 per mmBtu at a hub in Texas. Oklahoma gas prices fluctuated between $ 50 and peaked at $ 600. The US remained cautious with milder temperatures, which were between $ 4 and $ 12 per mmBtu on Friday. Price data compiled by Bloomberg shows that gas processing plants across Texas are closing as liquids freeze in pipes and disrupt production as soon as demand jumps. And oil production in the Permian Basin, the largest US shale game, is declining as wells slow down or come to a standstill. Texas’s top energy regulator has taken emergency steps to ensure that households, hospitals, utilities and other customers with “human needs” have priority access to gas for stoves. Texas Railroad Commission officials warned that there would be “a serious impact on the provision of energy resources” in the coming days. According to PowerOutage.us, the wild weather left 668,261 customers in six states without power on Saturday. Oregon and Virginia were hardest hit, with more than 200,000 customers in the dark. Mexico to Canada Fort Worth, Texas, saw up to four inches of snow fall over the weekend, with temperatures potentially in the single digits of Fahrenheit on Sunday and Monday. Houston will likely get a layer of ice and less than an inch of rain. Freezing rain has already created treacherous driving conditions there. 130 people were killed and dozen injured in Forth Worth on Thursday. Winter storm warnings, clocks, and advice stretch from Brownsville, Texas, on the Mexico border to Maine’s Canadian border. Mexico has snow warnings for northeastern parts of the country and Canada has similar warnings for its maritime provinces. Winter’s worst wrath will miss the major cities along the east coast because the storm’s trail will be too far west, Oravec at the Weather Forecast Center said. There might be snow showers and ice in New York and Boston, but most of the buildup will take place Monday through Tuesday in New York state and interior New England. “In the major east coast metropolitan areas, they lack the worst aspects of this winter weather,” Oravec said. (Updates electricity prices in fourth and eighth paragraphs.) For more articles like this, visit bloomberg.com. Sign up now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP
