Natural Gas Prices Surge 10% On Cold Temperatures
U.S. natural gas futures have extended their rally, jumping nearly 10% on Monday’s session following forecasts for much colder weather as well as higher heating demand through late December than previously expected.
Colder weather is likely to force utilities to pull more gas from storage, with storage levels already ~1.5% below the five-year average for this time of year.
The cold snap is expected to start next weekend and peak right on Christmas in the bulk of the country.
Meanwhile, the deep freeze in Europe shows no signs of abating, although much of that may have already been priced in. The period from Dec 19 through Boxing Day is now tracking towards moderately higher-than-normal temperatures, which should offer some relief for TTF.
The weekend weather data held a series of frigid cold shots advancing out of Western Canada and into the U.S. during this time frame, resulting in chilly low temperatures and strong natural gas demand nationally. What makes the pattern strongly to the bullish side is the end of the weather model runs teased cold Canadian air continuing to advance into the Lower 48, suggesting strong national demand will last through the end of the month
The January Nymex contract was up 62.7 cents to $6.872/MMBtu at around 8:50 a.m. ET. February was up 56.7 cents to $6.649. On the west coast, spot gas prices extended their recent surge to the highest in nearly two years as freezing temperatures and snow raised the demand for scarce supplies of the fuel.
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