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Fair Use Act usage: for educational and research purposes 12/21 11:55
Natural Gas Rises to Record as Supplies Seen Falling Too Fast
By Bradley Keoun

New York, Dec. 21 (Bloomberg) -- Natural gas rose 6 percent to a record on concern that cold weather is draining U.S. inventories too quickly to avoid supply interruptions during the peak-demand winter heating season.

Supplies fell 7 percent last week to 2.11 trillion cubic feet, the American Gas Association said in a report yesterday. That was the lowest level for the time of year since the AGA began keeping records seven years ago. Cold weather is expected to keep heating demand high in coming days.

``We're getting deeper into the winter and deeper into our inventories,'' said Michael Hiley, an energy broker at ABN Amro Inc. in New York. ``Even normal temperatures going forward'' could leave supplies so low that distributors may have to limit deliveries to some customers, he said.

Natural gas for January delivery rose as much as 57.4 cents, or 6.2 percent, to $9.90 per million British thermal units on the New York Mercantile Exchange, eclipsing the previous record of $9.86 recorded on Dec. 11. Natural gas futures began trading on the Nymex in April 1990.

Prices have quadrupled in the past year as increased demand from manufacturers and power producers limited the amount of natural gas put into storage for the winter.

Inventories are 23 percent lower than they were at this time last year, according to AGA figures. That deficit may widen because this winter is forecast to be colder than last winter, which was the warmest on record.

Midwest Storms

Prices have climbed 53 percent in the past month alone as a series of early winter storms battered the north-central U.S., the nation's largest market for heating gas.

A storm yesterday dumped 3 to 6 inches of snow on the region. A total of 23.2 inches of snow has fallen so far this month in Moline, Iowa, a record for December, according to Weather Services Corp. in Lexington, Massachusetts.

Temperatures were expected to fall throughout the day in Chicago, the region's biggest city, reaching about zero Fahrenheit by nightfall, said Joel Veeneman, a meteorologist at the National Weather Service in Chicago.

As much as 5 inches of snow fell on the city yesterday and more snowfall is likely on Saturday and Tuesday, with temperatures rising only into the teens early next week, Veeneman said.

At this rate, this winter in Chicago would be the snowiest since the winter of 1978-79, when the city received a record amount, he said.

-- (perry@ofuzzy1.com), December 21, 2000