Key Points
- U.S. natural gas prices have jumped by almost 20% due to a massive winter storm.
- The freezing weather has boosted heating demand and disrupted nearly 10% of U.S. production.
- Prices have soared above $6 per million British thermal units for the first time since 2022.
- The rally follows a 70% jump last week, the biggest weekly advance since 1990.
U.S. natural gas prices have surged by nearly 20% as a massive winter storm sweeps across the country, boosting demand for heating and disrupting production. Futures for the fuel soared above $6 per million British thermal units for the first time since 2022. This comes on the heels of a 70% rally last week, the biggest weekly jump in over 30 years.
The big freeze has knocked out almost 10% of the nation’s natural gas production at the exact moment that demand is spiking. The extreme weather has also strained electricity grids and caused chaos for transportation, with thousands of flights being grounded.
The disruption is being felt most acutely in key export hubs like Louisiana and Texas. Gas flows to the country’s liquefied natural gas (LNG) export plants have fallen to their lowest level in a year.
The largest U.S. grid operator is now pushing power plants to secure their natural gas supplies for the rest of the week, as they expect the frigid temperatures to drive electricity use to a new winter record.
The last time natural gas prices were this high was in December 2022, when Europe was scrambling to buy U.S. LNG after Russia cut off its supplies. The current volatility is a reminder of just how sensitive the global energy market is to supply disruptions.
The price surge is also being made worse by a technical market factor. The February contract for natural gas is set to expire on Wednesday, which is making the market even more volatile.
