Natural gas price hits record high

By Bloomberg News, 12/1/2000

EW YORK - Natural gas surged to a record high as a larger-than-expected decline in US inventories spurred concern that supplies of the heating fuel would be low throughout the winter.

US gas inventories fell 5.5 percent last week to 2.502 trillion cubic feet, the American Gas Association said in a weekly report Wednesday. Inventories now are 17 percent below year-ago levels. Forecasts for colder weather from Chicago to New York next week helped spur yesterday's rally.

Without a week or more of warm weather, the year-on-year storage deficit ''is only going to widen,'' said Randy Gary, manager of gas supply operations at Indiana Gas, which serves about 510,000 customers in central and southern Indiana. ''That's going to help keep prices strong.''

Natural gas for January delivery rose 40.8 cents, or 6.6 percent, to $6.589 per million British thermal units on the New York Mercantile Exchange. Prices during the session rose as high as $6.73, a record for a most-active contract in 10 years of futures trading. The previous record was $6.62 set on Nov. 22.

Prices are up 47 percent this month and have almost tripled in the past year. Yesterday's gain was the biggest one-day rise on a percentage basis since Oct. 11.

Natural gas is used to heat about 70 percent of US households.

The US Energy Department, has warned that Americans may pay 44 percent more to heat their homes with gas this winter than they did a year ago. The forecast was based on higher prices and expectations that the weather will be colder than it was last winter, which was the warmest on record.

An arctic high pressure system over northern Siberia and northwest Canada will move into the central United States toward the middle of next week, said Jim Rouiller, chief meteorologist at Planalytics Inc. in Wayne, Pa.

The cold wave will move eastward, encompassing the eastern half of the United States by the weekend.

The inventory decline reported by the AGA came partly because of growth in demand over the past several years from gas-fired power plants, and as a growing economy spurred construction of homes and businesses that are heated with natural gas.

Gas heating demand in the United States was 33 percent above normal last week and 88 percent higher than the same week a year ago, according to the National Weather Service.

http://www.boston.com/dailyglobe2/336/business/Natural_gas_price_hits_record_high+.shtml

-- Martin Thompson (mthom1927@aol.com), December 01, 2000