Natural gas spot prices increased last Thursday and Friday as weather forecasts called for below-average temperatures throughout the eastern United States. The largest spot price increases occurred in New England, where the Algonquin Citygate (Boston) price rose to $7.92 per million British thermal unit (MMBtu) on Friday, March 10, its highest level since January 6. In addition, on Friday, March 10, the National Weather Service (NWS) forecasted a significant late-winter storm off the Mid-Atlantic coast to occur on March 13–14, accompanied by much lower-than-normal temperatures for the region that would persist through March 16. The Henry Hub spot price also increased 30¢ in trading Friday, compared to Monday, March 6, closing at $2.98/MMBtu.
As weather forecasts called for colder weather across a larger region of the eastern United States, spot prices increased across most hubs in these markets. In addition to the price increases in Boston, natural gas in New York (Transcontinental Pipeline Zone 6) closed on Friday at $5.93/MMBtu—a more than 150% increase over the closing price on March 6. Natural gas in the Mid-Atlantic (Texas Eastern M-3, Delivery), which has traded at a discount to Henry Hub for much of the past year, rose more than 75% from Monday’s price to close at $4.04/MMBtu on Friday.
Historically, both the Boston and New York natural gas markets have experienced winter price spikes because of pipeline constraints during periods of peak demand. Natural gas pipeline expansion projects that were completed in recent years may have reduced, but did not eliminate, sharp price increases with anticipated cold weather. Several expansion projects to the New York market came online between 2013 and 2015, which added 3.5 billion cubic feet per day (Bcf/d) of delivered capacity. In November 2016, the Algonquin Incremental Market (AIM) expansion was completed, which provided an additional 0.342 Bcf/d of natural gas deliverability and was the first increase in pipeline capacity into New England since 2010.
In recent years, natural gas has shown less winter price volatility in Northeastern markets, which is consistent with the milder winters. During the winter of 2013–2014, natural gas prices in New England reached historic highs, peaking near $80.00/MMBtu in Boston, because of prolonged, bitterly cold weather. Spot prices peaked at lower levels during the winter of 2014–15, with prices reaching $29.99/MMBtu in Boston and $38.15/MMBtu in New York despite brief record levels of natural gas consumption in February 2015. Last winter, neither market experienced spot prices that were more than $9.00/MMBtu because of record high natural gas inventories and warm weather.
