Jan 3 (Reuters) – U.S. natural gas prices gained over 2% on Monday (closing at $3.81 per MMBtu, +8.5 cents) after output fell during the New Year’s weekend as cold weather froze some production wells in Texas, New Mexico and Colorado, reminding the market of what can happen when temperatures drop.
Last February, a brutal winter storm named Uri killed more than 100 people and left around 4.5 million Texas homes and businesses without power and heat – some for days – after gas pipes and power plants froze.
The cold over the New Year’s weekend, however, was nowhere near as extreme as last February’s freeze. Well freeze-offs occur whenever temperatures drop enough to freeze water and other liquids in a well or pipe and halt production.
“Gas prices have been falling recently with the rise in production but gained on Monday as the freeze-offs disconcerted the market,” said John Abeln, senior analyst of natural gas research at data provider Refinitiv.
Gas output in the U.S. Lower 48 states fell to an average of 94.8 billion cubic feet per day (bcfd) so far in January from a record 97.6 bcfd in December, according to Refinitiv data.
Much of that production decline was in Texas and occurred on Sunday.
Low temperatures in the West Texas town of Midland plunged to an overnight low of 16 degrees Fahrenheit (minus 9 Celsius) on Sunday but were expected to rise to a near-normal overnight low of 32 F on Monday, according to meteorologists at AccuWeather.
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Midland is located in the Permian Basin, which is the biggest oil-producing and second-biggest gas-producing shale formation in the United States.
Since last February’s freeze, Texas has approved numerous laws and regulations that state officials say should improve power and gas market reliability, and avoid price spikes and outages like those seen last winter. read more
Story Credit: Reuters. Reporting by Scott DiSavino; Editing by Sandra Maler
