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Extreme cold weather sinks U.S. natural gas exports to Mexico

Luke Sharrett /Bloomberg

Residential and commercial demand in the Gulf has soared. Gas prices in West Texas hit the highest level in a year

By Ryan Collins

Petroleumworld 04 01 2018

The unusual frigid weather hitting the U.S. Gulf of Mexico has the region burning the most natural gas in a year to stay warm, leaving little fuel to send south of the border.

Residential and commercial demand for gas in the Gulf rose to 5 billion cubic feet a day this week, the highest since last January, according to estimates from Bloomberg New Energy Finance. Spot prices at the Waha Hub in West Texas, which usually trade at a discount to the Henry Hub benchmark in Louisiana, surged to a 69 cent premium , according to Genscape Inc. data. With demand soaring in Texas, gas exports to Mexico on Tuesday dropped to the lowest level since Hurricane Harvey hit the Gulf in August.

Frigid temperatures from Texas to New York are shaking up the U.S. gas market. The fuel usually flows to the Gulf from the Northeast, where there are ample supplies, but with demand skyrocketing in the region, flows have actually been reversed, said Het Shah, analyst at Bloomberg New Energy Finance.

"It's been so cold in the Northeast that gas has actually been flowing south to north to keep up with the demand," Shah said. "The gas is being reshuffled and moved east and north."

That means Texas is sending a lot less of the fuel out west, usually one of its prime markets. Flows from the Gulf to the Southwest dropped to 72 million cubic feet a day Wednesday, the lowest since March 2015.


Story by Ryan Collins from Bloomberg.

bloomberg.com/ 01 03 2018

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