The arctic freeze gripping the central US is set to intensify, putting further pressure on energy prices already trading at unprecedented levels over the long holiday weekend.
Natural gas hit a record $600 per million British thermal units in Oklahoma. Temperatures fell so far below forecasts in parts of the central and western US that physical gas prices soared from California to the Rockies, with one hub in Cheyenne, Wyoming, reaching as high as $350 per mmBtu, according to traders who asked not to be identified because the information isn’t public.
Heating and power plant fuel traded for as much as $195 per mmBtu in Southern California. If day-ahead electricity prices are any indication and the weather forecasts are even partly accurate, the run-up in energy prices isn’t over.
“It is a pretty brutal air mass,” said Bob Oravec, senior branch forecaster at the US Weather Prediction Center. “The cold air is entrenched across the middle part of the country. High temperatures are amazingly cold, some 50 degrees below average.”
Across the US, 797 daily records for cold temperatures have been set, according to the National Centers for Environmental Information.Through early Sunday, the coldest spot in the US was 25 miles east of Ely, Minnesota, where readings fell to -50 degrees Fahrenheit (-46 Celsius). As of 7 a.m. New York time, 2,653 flights around the US through Monday had been canceled, the majority in Dallas and Houston, according to FlightAware, an airline tracking service.
Wholesale power for delivery Sunday was trading at anywhere from $3,000 to $7,000 a megawatt-hour in some places, triple the records set in some places Saturday and a staggering 2,672% increase from Friday at Texas’s West hub.
Traders on Saturday said they’ve never seen electricity trade on Texas’s grid for thousands of dollars for such a sustained amount of time. They drew comparisons between this week’s price surges to the records set on the Midwest grid in 1998, and to the California energy crisis that sent power prices skyrocketing and blacked out hundreds of thousands of homes and businesses two decades ago.
Temperatures this low and heating demand this high could test Texas’s electricity price caps on Sunday.
Among the other markets moving on the cold: Gas in Chicago hit $220 per mmBtu, traders said.
Physical gas was going for as much as $300 per mmBtu at a Texas hub.
Oklahoma gas prices have swung anywhere between $50 to the high of $600.
Spot gas prices across the eastern US remained subdued amid milder temperatures, assessed at anywhere from $4 per to $12 per mmBtu on Friday, pricing data compiled by Bloomberg show. Gas processing plants across Texas are shutting as liquids freeze inside pipes, disrupting output just as demand jumps. And oil production in the Permian Basin, the biggest U.S. shale play, is moderating as wells slow down or halt completely.
Texas’s top energy regulator took emergency measures to ensure households, hospitals, utilities and other “human needs customers” get priority access to gas for furnaces. The Texas Railroad Commission’s staff warned that there will be “severe impact on the provision of energy resources” in coming days. The wild weather left 668,261 customers without power in six states on Saturday, according to PowerOutage.us. Oregon and Virginia were the worst hit with more than 200,000 customers in the dark.
As much as 4 inches (10 centimeters) of snow could fall in Fort Worth, Texas, over the weekend, with temperatures possibly plunging into the single digits Fahrenheit on Sunday and Monday. Houston will likely get a coating of ice and less than an inch of rain.
Freezing rain has already created treacherous driving conditions there, with a 130-vehicle pileup in Forth Worth on Thursday leaving six dead and dozens injured.Winter storm warnings, watches, and advisories stretch from Brownsville, Texas, on the border with Mexico to Maine’s border with Canada. Mexico has snow warnings for northeastern parts of the country, and Canada has similar for its Maritime Provinces.
The worst of winter’s wrath will miss the major cities along the East Coast because the storm’s track will be too far to the west, Oravec at the Weather Prediction Center said. There could be some snow showers and ice in New York and Boston, but the bulk of the accumulation will be in upstate New York and interior New England Monday to Tuesday.“The major metropolitan areas of the East Coast, they are missing out on the worst aspects of this winter weather,” Oravec said.