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Mild Weather Continues to Ease Gas Supply-Demand Strain

January 9, 2006
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With winter weather conditions still in mostly hibernation for a large swath of the United States, and natural gas prices plummeting as a result, the question within the energy industry remains how long can the unseasonably warm conditions last? Unfortunately, the answer is: it depends on whom you ask.

Through Thursday of last week, February natural gas futures had dropped $6.281 from the contract's all-time high of $15.780, which was recorded on Dec. 13, 2005. The settle Thursday of $9.499 represents a 40% drop from the February contract high in a little over three weeks.

The fear heading into the winter heating season, where gas demand rises significantly, was that a cold winter would likely strain the hurricane-weakened supply of natural gas. As of Thursday, the Minerals Management Service reported that a little more than 574 Bcf of natural gas had been shut-in in the Gulf of Mexico due to hurricanes since Aug. 26, 2005, which is equivalent to 15.732% of the 3.65 Tcf in yearly production out of the resource area. However, the country is already more than two weeks into winter; real cold remains elusive, and the market is doing just fine without that lost gas. said Friday that although the Northeast will likely see typical January cold over the weekend, the coming week is likely to be fairly mild again. "A dip in the jetstream will allow for a quick surge of typical January cold through the start of the weekend in the Northeast," said meteorologist Rob Miller. "This cold air will then lift quickly northeastward Saturday night. Milder air across the Midwest will overrun the colder air, producing a band of light snow for the eastern Great Lakes. This snow will push into northern New England Sunday, while the Middle Atlantic states turn milder."

Miller said this coming week (Jan. 9-13) will likely be mild over a vast majority of the country, with only some cold in the North. "The jet stream will continue to flow in a zonal west-to-east pattern, keeping the coldest arctic air locked up in northern Canada," he said. "In addition, this pattern will allow for storm systems to pound the Northwest coast, keeping it rather damp across the region. Also, dry and mild weather will exist from Southern California, eastward through the southern Plains. Warm temperatures will be found across Florida."

The National Weather Service continues to call for warmth as well. In its most recent six-to-10-day forecast (Jan. 12-16), the NWS shows above average temperatures for the majority of the U.S. with the only exceptions being Florida, the West and Alaska. Even then, those areas are forecast to have equal chances of below or above normal temperatures, with Alaska expected to be the only U.S. land to see below normal readings.

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