US natural gas surge as colder weather rushes in
U.S. natural gas futures rose this week as colder weather with snow arrived in parts of the country.
Although significantly lower than Asian or European gas prices, US natural gas futures in January rose 1.7% earlier in the day to $4.127 per million British thermal units, according to Bloomberg. A day earlier, the contract had gained 8.8% in the biggest one-day rise since October, again due to weather forecasts.
The Wall Street Journal recalls that Monday’s price jump followed four weeks of decline. According to the Weather Prediction Center, winter will bring heavy snowfall, freezing temperatures, and high winds to the northern and western United States.
For early January, forecasts call for colder weather that could even affect natural gas production, according to NatGasWeather. The forecaster reported that freezes were likely in the first week of January in parts of the country, including the Rockies, the Bakken Shale Game and the Midcontinent.
A hypothetical repeat of this year’s Texas Freeze would also affect natural gas production and, therefore, prices.
As a result, natural gas demand is expected to reach 126.7 billion cubic feet per day, according to Refinitiv data. That’s up from 110 billion cubic feet.
“The upcoming colder weather in the United States will be watched and we should see a substantial recovery in heating demand next week,” BOK Financial analysts said in a note quoted by The Wall Street Journal.
Meanwhile, natural gas production in the Lower 48 was 97.9 billion cubic feet on Monday, according to data from BloombergNEF. It was 6.4% more than a year ago.
Demand in the Lower 48 was 84.5 billion cubic feet, down 4.8% on the year, the data showed. Gas flows to liquefaction terminals on the Gulf Coast averaged 12.4 billion cubic feet on Monday.
By Charles Kennedy for Oilprice.com
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