Investing.com - Natural gas futures hit seven-month highs of above $3 per mmBtu, or million metric British thermal units, on Wednesday as speculators chased up prices of America’s favorite fuel for indoor cooling and heating amid a reported slow down in production from pipeline issues.
By 09:35 ET (13:35 GMT), the front-month September gas contract on the New York Mercantile Exchange’s Henry Hub was at $2.95 per mmBtu, up 17.3 cents, or 6.2% on the day. It earlier hit $3.018.
The last time gas prices on the hub crossed $3 was during the week of Jan. 20, when they peaked at $3.595.
Prior to Wednesday, the market had been stuck at mid-$2 for months as production often came in higher than thought, with weather conditions less intense than projected, resulting in less power burns than forecast for heating and cooling.
Analysts at Gelber & Associates, a Houston-based energy markets advisory, had warned earlier this week about maintenance issues on the NEXUS and REX pipelines that could slow gas production, which had often breached the daily threshold of 1 billion cubic feet, or bcf.
Nexus is an approximately 256-mile, 36-inch interstate natural gas transmission pipeline designed to transport up to 1.5 bcf of daily gas delivery from feed points in eastern Ohio to southeastern Michigan. REX, an acronym for the Rockies Express Pipeline, is a 1,679-mile (2,702 km) long gas delivery gas system from the Rocky Mountains of Colorado to eastern Ohio.
“Overall, the suppression of Northeastern (gas) flows will likely be felt in Lower 48 production throughout the week,” the analysts at Gelber said, referring to output across the 48 contiguous U.S. states.