Frigid weather across North America drove up natural gas prices in January with AECO spot prices above $4 per gigajoule for the first time in four years while heavy oil prices continued to strengthen.
AECO gas climbed 9% to $4.09 per gigajoule from $3.69 a gigajoule in December 2013, with last month’s price the highest since February 2010 when gas fetched an average of $4.94 a gigajoule. Year-over-year, prices were up more than 41% from the January 2013 average of $2.90 per gigajoule.
On the New York Mercantile Exchange (NYMEX), near-month futures prices gained 6.6% to an average of US $4.54 per million British thermal units (mmBtu) from $4.26 per mmBtu in December. Prices were up nearly 28% over the January 2013 average of $3.36 per mmBtu.
In response to the extreme weather, larger volumes of gas are being pulled out of storage, United States Energy Information Administration figures show. With 2.19 trillion cubic feet of gas in storage as of Jan. 24, 2014, stocks were 16.6% below the five-year average, said the EIA.
January proved a record-setting demand month for U.S. natural gas, posting seven out of the top 10 demand days on record, according to Bentek Energy, a Platts oil and natural gas analytics unit. Natural gas demand averaged 102 billion cubic feet (bcf) per day in January – 7.8 bcf per day higher than the previous maximum demand achieved on a monthly average basis, it said.
The monthly figure for natural gas demand was also 241 bcf higher than for any other month on record, which Platts attributed to the cold weather.
Bentek said that barring extreme weather or other upset developments, it had projected this level of demand would not have materialized until January 2019 when liquefied natural gas (LNG) exports were expected to become a new source of natural gas demand for the United States.
On the oil side, near-month prices for light sweet crude posted by Canadian refiners Imperial Oil Limited and Suncor Energy Inc. averaged $89.62 per barrel, up 7.7% from an average of $83.25 per barrel in December 2013.
Net Energy implied prices Western Canada Select heavy gained 10.5% to an average of US$83.26 per barrel from $75.34 per barrel in December 2013 while the differential between light and heavy prices narrowed to $6.36 per barrel from $7.91 per barrel the previous month.
Imperial Bow River also increased to C$72.38 per barrel in January from $63.48 per barrel in December as the differential between light and heavy crude declined to $17.35 per barrel from $19.79 per barrel.
Globally, NYMEX Light WTI fell to US$94.83 per barrel in January from $97.75 a barrel in December while North Sea Brent declined to $107.14 per barrel from $110.51 a barrel. At the same time, the differential between Brent and WTI narrowed slightly to $12.31 per barrel from $12.76 a barrel.
