By Joyce Yu
Philadelphia, PA–Temperature in the U.S. Northeast plunged as a severe winter storm swept the region, driving regional natural gas prices to all-time highs, while disrupting refinery operations and causing electrical outages.
Demand of the natural gas, the major heating fuel in the Northeast and is also widely used by power plants, was expected to remain near record highs this week. Estimated U.S. natural gas demand soared on Monday, surpassing the previous single-day record cording to estimates from Reuters. Natural gas prices in the U.S. Northeast were at an all-time record on the back of heating demand. Spot gas in New England soared to a record $82.75 per mmBtu, according to data going back to 1995. The prior high was $77.60, also in January 2014.
The supply side, however, looks challenging. Refiners in the Philadelphia region were battling severe cold that has slowed crude deliveries and forced the largest plant on the U.S. East Coast to cut production. Philadelphia Energy Solutions has cut rates by 40 percent at its 335,000 bpd refinery complex in Philadelphia due to a winter storm slowing crude deliveries, a source familiar with the plant’s operations told Reuters on Friday. The company also postponed planned work at its 335,000 barrel-per-day refinery complex in Philadelphia until after the storm. The only nuclear plant in Massachusetts remained shut.
With distillate inventories in the New England and Mid-Atlantic regions at their lowest levels for this time of year since 2015, there are concerns that a significant disruption could lead to a heating oil shortage. The ISO New England grid operator warned late Sunday that managing the region’s power system “continues to be challenging”, noting that some of the region’s oil-fired generators were “quickly depleting their fuel supply”.
To meet the demand, ships imported liquefied natural gas to Atlantic coast ports with icebreakers used in ports of Boston, New York and Philadelphia to keep shipping lanes clear. Tankers carrying diesel and heating oil set out from Europe for the United States, reversing a traditional trade route.
On contrary to the brutal weather, the U.S. stock market, driven by the new tax bill, ushered in 2018 with its best week in more than a year. With risk assets globally enjoying a strong start to 2018, corporate earnings may dictate the next move for equity markets. Announcing their results this week are U.S. companies including Wells Fargo & Co. and BlackRock Inc.
