Monday, January 13, 2014

Weather Based Gas Demand

It has been a particularly difficult winter to analyze weather-based natural gas demand, especially to isolate it from the price sensitive electric power market and possible changes in gas production rates.

Last year started off quite mild and progressed colder, as shown below.  This winter began with a very cold Nov-Dec, including some record weeks, but also wildly fluctuating temperatures.  

Though last week's polar vortex (so called) set many records, the week as a whole was not so exceptional.  Yet a record gas draw from inventory is anticipated.  In fact, gas-weighted degree days were only +21 above normal, per NOAA.

It brings questions about how much structural change we may be seeing in heating demand per degree day, as well as regional issues with supply in the Northeast, and the effects of freeze-offs on supply.

We are in the middle of a very warm week now, and then a return to cold is anticipated.