Natural gas demand was at an all-time high for a second day Tuesday, but prices slipped as more moderate temperatures were expected and a government agency lowered its estimate for overall gas consumption in 2014 by 2.2 percent.
Platts' Bentek Energy said natural gas delivered to consumers across the U.S. hit 134.3 billion cubic feet per day, surpassing Monday's record 130.4 Bcf/d. Demand was highest in the Northeast where residential and commercial demand jumped 30 percent from Monday's level.
February natural gas futures, traded on the Nymex, fell 7 cents to $4.299 per million British thermal units, after moving higher earlier in the day. Natural gas has run up 2.3 percent since the beginning of January, and is up 23 percent in the last three months.
But falling inventories could keep the upward pressure on prices, especially if there's another cold blast. "We're chewing through inventory. We'll probably be down to 2 trillion cubic feet in January, and we didn't see that level until March last year. We're ripping through it. There's going to be some extremely large withdrawals in storage in coming reports," said John Kilduff of Again Capital.
Commuters make a subzero trek to offices in the Loop on Tuesday in Chicago.Getty Images
Kilduff said production declines in freezing weather as demand picks up. He said production was down 1.2 Bcf in the past week. "If we're going to see a run at $5, it will be fairly soon. The storage reports will certainly create a catalyst for a bump higher," he said, noting it would probably be a temporary hike.
The frigid weather, bringing subzero temperatures and severe wind chills, stretched across the Midwest, to the South and up the East Coast into New England. It was expected to moderate and there could even be above normal temperatures in some areas later in the week.
The National Weather Service said temperatures are expected to remain well below normal Tuesday night across most of the central and eastern U.S., but the extreme wind chills are expected to rise, as winds subside and the strong low pressure moves farther north into Canada.