On the heels of this post from last week and ConocoPhillips’ big bet on natural gas earlier this week, natural gas futures jumped to another all-time high yesterday for a front-month contract and settled above $15 per million British thermal units for the first time. January futures on the New York Mercantile Exchange rose as high as $15.78 and settled at $15.378 per million British thermal units, which is an increase of about 38 cents from its previous settlement high.
Inasmuch as natural gas production in the Gulf of Mexico has still not recovered fully from the damage caused by multiple hurricanes earlier this year, natural gas supplies remain constricted. As a result, price is volatile on virtually any indication of increased demand, and the recent cold weather in the Upper Midwest and Northeast — the two main areas of hearing fuel demand — is seen as the primary cause of the increasing price of natural gas over the past week’s trading sessions. Following an unusually warm November in those regions, December has been bitterly cold as weather futures are betting that it will be at least 20% colder than normal in New York City and Chicago through the Christmas holiday.
Just the thought of that type of weather may force me to hit some golf balls at the driving range this afternoon in Houston’s beautiful late fall weather. ;^)