Natural gas prices spiked to a three-and-a-half year high on Friday as a surge in demand for the heating fuel and extent of the extreme cold spell across much of the country has led to concerns about whether there will be ample U.S. supplies to last through this winter.
NYMEX natural gas futures for February delivery skyrocketed nearly 10 percent to $5.182 per million British Thermal Units, the highest settlement price since June 2010. The price continued to gain in after-hours electronic trading.
Natural gas futures have now rallied more than 5 percent in each of the past three trading days and have gained nearly 20 percent so far this year. Meanwhile, cash prices for natural gas in the Northeast hit record levels this week - topping $135 in the New York and New Jersey area -- due to pipeline issues.
Weather forecasts indicate that the severe cold that is blanketing much of the country will stretch into the first part of next month. Heating demand is already as much as five times higher than normal for this time of year, according to some reports. Traders say production "freeze-offs" at drilling sites, pipeline disruptions, delivery issues and a resulting "panic" in the cash market has provided a considerable boost to natural gas futures.
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