(Bloomberg) – The arctic freeze that hits the center of the United States is likely to intensify, putting even more pressure on energy prices that are already trading at unprecedented levels during the extended holiday.
Natural gas reached a record $ 600 per million British thermal units in Oklahoma. Temperatures have dropped so far below forecasts in parts of the central and western United States that physical gas prices have skyrocketed from California to the Rockies, with a hub in Cheyenne, Wyoming, reaching $ 350 per mmBtu, according to traders who asked not to be identified because the information is not public.
Fuel for heating and power plants was traded for up to $ 195 per mmBtu in Southern California. If electricity prices for the next day are an indication and weather forecasts are, even if partially accurate, the rise in energy prices is not over yet.
“It’s a pretty brutal air mass,” said Bob Oravec, senior analyst at the US Weather Prediction Center. “Cold air is entrenched throughout the central part of the country. The high temperatures are incredibly cold, about 50 degrees below average. “
Across the U.S., 797 daily records for cold temperatures have been established, according to the National Environmental Information Centers. Early Sunday, the coldest spot in the U.S. was 25 miles east of Ely, Minnesota, where readings dropped to -50 degrees Fahrenheit (-46 Celsius). As of 7 am New York time, 2,653 flights in the United States through Monday were canceled, most in Dallas and Houston, according to FlightAware, an airline tracking service.
Huge increase
Wholesale energy for Sunday delivery was trading between $ 3,000 and $ 7,000 a megawatt-hour in some places, triple the records set in some places on Saturday and an impressive 2,672% increase from Friday in west central Texas.
On Saturday, traders said they had never seen electricity traded on the Texas grid for thousands of dollars for such an extended period. They made comparisons between this week’s price increases with the records set on the midwest electrical grid in 1998 and the California energy crisis that spiked energy prices and darkened hundreds of thousands of homes and businesses two decades ago. .
So low temperatures and so high heating demand could test Texas’s electricity price limits on Sunday.
Among the other markets that are changing with the cold:
Chicago gas reached $ 220 per mmBtu, traders say. Physical gas was flowing for up to $ 300 per mmBtu at a Texas hub. Oklahoma gas prices fluctuated between $ 50 and $ 600. Local gas prices in the eastern US remained subdued amid milder temperatures, valued at between $ 4 and $ 12 per mmBtu on Friday , show the price data compiled by Bloomberg.
Gas processing plants across Texas are closing as liquids freeze inside the tubes, stopping production as demand increases. And oil production in the Permian Basin, the largest shale game in the United States, is moderating as wells shrink or stop altogether.
Texas’ top energy regulator has taken emergency measures to ensure homes, hospitals, utilities and other “customers with human needs” have priority access to gas for furnaces. The Texas Railroad Commission team warned that there will be a “severe impact on the supply of energy resources” in the coming days.
Bad weather left 668,261 customers without power in six states on Saturday, according to PowerOutage.us. Oregon and Virginia were hardest hit, with more than 200,000 customers in the dark.
Mexico to Canada
Up to 4 inches (10 centimeters) of snow can fall in Fort Worth, Texas, over the weekend, with temperatures possibly dropping to one-digit Fahrenheit on Sunday and Monday. Houston will likely have a layer of ice and less than an inch of rain.
The freezing rain has already created treacherous conditions to drive there, with a pileup of 130 vehicles in Forth Worth on Thursday, leaving six dead and dozens injured. Warnings, clocks and warnings for winter storms range from Brownsville, Texas, on the border with Mexico to the border between Maine and Canada. Mexico has snow warnings for northeastern parts of the country, and Canada has similar warnings for its maritime provinces. The worst of winter’s fury will let major cities pass along the east coast because the storm’s trail will be too far to the west, Oravec at the Weather Forecast Center said. There may be some snow and ice showers in New York and Boston, but most of the build-up will be in upstate New York and in upstate New England Monday through Tuesday. “The major metropolitan areas on the East Coast are missing out on the worst aspects of this winter climate,” said Oravec.
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