Friday, January 24, 2014

The "Five Handle"

Yesterday, the Henry Hub spot price for natural gas closed at $5.55/MMBtu, up a whopping 64 cents from Wednesday and the highest it's been since Feb. 16, 2010, a reflection of astronomically high citygate prices in the northeast. The citygate is where the gas is transferred from the pipeline to the utility in large cities.  This week at the New York citygate, prices spiked to $135/MMBtu, and they may go higher before the current frosty blast subsides.  That is not a typo, $135.  Gas plants are takers at any price when the weather is as cold as it has been this month.

Neither of these prices are sustainable, but expect these bad memories to resurface as more coal plants shut down across the northeast later this year.

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