Natural-Gas Prices Reach Highest Level in Nearly a Year

East Coast Storms Boost Residential Demand

Benchmark U.S. natural-gas prices rose to the highest levels in almost a year, though the recent rally flattened out as Hurricane Sandy depressed power demand in the Northeast, the Energy Information Administration said.

Henry Hub gas as of October 31 was $3.50 per million British thermal units, up 7 cents from a week earlier and the highest since late November 2011. In midday NYMEX futures trading November 2, gas for December delivery fell 12.9 cents to $3.57, after earlier dropping to $3.552, a five-week low.

In the Northeast, gas power burn generally fell over the past few days, "possibly as a result of reduced demand for electricity,” the EIA said. However, any declines in gas-fired generation because of electric power demand destruction “may be somewhat mitigated by power producers substituting natural gas for lost nuclear capacity resulting from the storm."

During the week ended October 31, total U.S. gas demand rose 9.1% from the previous week, as blizzards in the Eastern U.S. propelled a surge of nearly 35% in residential and commercial use. Working gas in underground storage increased to 3.908 trillion cubic feet as of October 26, up 65 billion cubic feet from the previous week and the highest since the EIA began keeping records.

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