As cold weather rolls through Oklahoma, natural gas producers are hopeful the low temperatures will drive prices higher.
The Henry Hub spot price for natural gas closed Thursday at $3.70 per 1,000 cubic feet, up 3 cents on the day. The price has held between $3.20 and $4 for most of the year.
“It's going to be a function of the weather,” Oklahoma City natural gas marketer Tony Say said. “If it stays cold into December and January, then you could have some significant withdrawals out of storage. That certainly could affect the price.”
While the cold weather pushing through Oklahoma this week likely will drive up local usage, temperatures in the large population centers in the eastern part of the country have the greatest effect on the price of natural gas.
The influence has grown in recent years as homes and businesses have converted to natural gas from heating oil.
“The demand side of the equation continues to grow, not just with more homes switching to natural gas, but we're also seeing significant power demand that is picking up a lot of natural gas,” said Say, president of Oklahoma City-based Clearwater Enterprises. “That demand continues to grow, especially with older coal plants returning and natural gas becoming more the fuel of choice.”
The price of natural gas averaged $2.75 last year, and the U.S. Energy Information Administration said Thursday the average price is expected to be around $3.68 this year and $3.84 next year.
The natural gas price has been trending upward for much of the past two years, but the movement has been much slower than many natural gas producers have hoped.