High Northeast gas prices: Here today, gone tomorrow?
After years of trading at less than $2/mmbtu, Northeast gas prices have finally rallied—and reconnected with the broader market. About 1.5 bcfd of new pipeline capacity was added from the Northeast to other regions in Q4 2016. And for once, this new exit capacity was not matched with supply growth. As gas production has not matched exit capacity, gas prices have rallied, averaging about $2.90/mmbtu at Dominion South Point since the last pipeline expansion project, in early December. But Wood Mackenzie does not expect this strength to last much past heating season, as detailed in this insight. The difference between this winter’s strong Northeast prices and the sub-$2/mmbtu prices of the last couple years, reflects the combination of: How much additional supply is required to fill up available exit capacity. How much Northeast gas demand would increase as gas prices fall How much demand in the Northeast will decline seasonally