US Northeast spot gas prices tumble on lower power burn

Cash gas prices in the US Northeast fell sharply in Sept. 3 trading for holiday weekend flows, as gas-fired power burn drops in the wake of the Ida storm system.

New England gas benchmark Algonquin, city-gates was trading 47 cents lower at a 30-day low of $3.43/MMBtu, according to preliminary settlement data. Similar double-digit losses were seen across the region, with Transco Zone 6 NY down 42.50 cents at $3.375/MMBtu and Iroquois Zone 2 down 29 cents at $3.955/MMBtu.

Appalachia spot gas prices also weakened, with Eastern Gas, South – formerly known as Dominion, South – trading 34.50 cents lower at $3.47/MMBtu.

After making landfall Aug. 29 near New Orleans as a Category 4 hurricane, the remnants of Ida pushed north, bringing flash flooding and tornadoes across the Mid-Atlantic and Northeast. The storm caused approximately 130,000 electricity customers across Pennsylvania, New Jersey and New York to lose service as of Sept. 2, Platts reported.

Ida also brought cooler temperatures which, combined with the power outages, dramatically decreased the region's gas-fired power demand.

S&P Global Platts Analytics data shows that gas deliveries to power plants in the Northeast via interstate pipelines dropped by 3.2 Bcf/d to 6.2 Bcf/d since Aug. 30, the day before the storm entered the region.

New York and Ohio have seen the biggest drops in gas deliveries to power plants, with New York experiencing a 530 MMcf/d reduction since Aug. 30, and Ohio seeing a 485 Bcf/day drop since Aug. 30.

Total power burn demand in the region has dropped almost 4 Bcf/d since Aug. 30 to 7.4 Bcf Sept. 3.

The lower power burn is likely to continue in the near-term, with the National Weather Service forecasting "drastically cooler and drier conditions" for the Northeast and Mid-Atlantic in its daily Short Range Public Discussion Sept. 3.

The agency's six- to 10-day outlook also bears this forecast out, with the Northeast expected to see either below-normal or normal temperatures in that time frame.

Towards the middle of the month though, temperatures could begin to climb again. Platts Analytics has projected regional gas-fired power demand to average 9.06 Bcf/d for the week after next, which could help boost spot gas prices.