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Mild weather, production growth deflate spot natural gas market in February

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Mild weather, production growth deflate spot natural gas market in February

After a frigid January, unseasonably mild weather and growing natural gas production brought spot natural gas prices sharply lower versus the prior month in February, with the Northeast seeing the largest declines.

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The U.S. Energy Information Administration expects shale gas production growth will have continued for 12 consecutive months in March, with the lion's share of the month's increased production coming out of Appalachia.

According to the U.S. National Oceanic and Atmospheric Administration, nationwide gas home heating customer-weighted heating degree days, a proxy for space heating demand for natural gas, were 11.1% below normal but 14.3% above the year-ago level during the four weeks ended Feb. 24.

At the same time, heating degree days in New England were 17.8% below normal and 6.7% below the year-ago level.

Despite the relatively mild New England weather, average spot prices at demand centers in the Northeast were up nearly 25% year over year in February, more than offsetting declines seen at hubs serving the region's growing production.

Spot prices at Algon Gates averaged $4.784/MMBtu during February, up 24.8% year over year, while those of Leidy averaged $2.234/MMBtu for a 8.9% decline.

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Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power, natural gas and coal index prices, as well as forwards and futures, visit our Commodities pages.