Gas reaches key $3 mark for the first time since Jan

On Wednesday, speculators chased the price of America’s preferred fuel for heating and cooling indoors to seven-month highs above $3 per million British thermal units (mmBtu). This was despite a reported production slowdown due to pipeline issues.

By 9:35 ET (13.35 GMT), Henry Hub’s front-month gas contract for September was $2.95, an increase of 17.3 cents or 6.2%. It had earlier reached $3.018.

Last time the gas prices in the hub exceeded $3 was the week of January 20, when they peaked to $3.595.

The market was stuck in the mid-$2 range for months because production came in higher than expected, and weather conditions were less intense than predicted, leading to less energy burn than forecast.

Gelber & Associates analysts, a Houston energy market advisory, warned this week that maintenance issues could cause the NEXUS pipelines and REX to slow down gas production. The daily threshold for gas production had been frequently exceeded by 1 billion cubic feet (bcf).

Nexus, a 256-mile-long interstate natural-gas transmission pipeline with a 36-inch diameter, is designed to carry up to 1.5 billion cubic feet of gas per day from feed points located in eastern Ohio into southeastern Michigan. REX is an acronym for Rockies Express Pipeline. It’s a 1,679 mile (2,702 km), long gas delivery system that runs from the Rocky Mountains in Colorado to Eastern Ohio.

The analysts at Gelber stated that “overall, the suppression of Northeastern gas flows will likely be felt throughout the week in Lower 48 production,” referring to the output across 48 contiguous U.S. States.