Highlights
● Natural Gas Rises by 20%
● Weather Forecast Reflects Colder Winter in January
● Natural Gas demand for Home heating Surged by 58%
Price Surge
Monday saw a spike in natural gas futures prices, reaching a 52-week high after reports of a lower-than-normal January temperature projection surfaced. Following the release of an updated outlook by The Weather Co. and Atmospheric G2 on Sunday, which indicated that the temperature forecast for next month is expected to be colder than average in the East, specifically from Florida to Maine as well as some parts of the Great Lakes, natural gas February futures increased by about 15% during the session.
However, the research predicts that temperatures in the West will be milder than usual.Interestingly, the “Four Corners” region—which comprises the northwest corner of New Mexico, the southwest corner of Colorado, the southeast corner of Utah, and the northeastern corner of Arizona—is predicted to be the most above-normal. According to the analysis, the East may experience a peak in cooler temperatures by the middle of the month, which would be “much farther below average” than what was predicted for the eastern U.S. for the entire month. However, how temperatures will hold in the second half of January is yet unknown.
Weather Forecast
According to a different prediction from AccuWeather meteorologists, the colder air could create a “stormy pattern,” resulting in “substantial snow and ice” in some places for a large amount of the first half of the month. The decline will start in the middle and end of next week, they added. On Monday’s edition of CNBC’s “Squawk on the Street,” John Kilduff of Again Capital warned that natural gas “freeze offs,” or interruptions in natural gas production flows, might occur. “We are discussing the bone-chilling polar vortex weather that is responsible for this morning’s natural gas increase,” as stated by the founding partner of the firm.
Demand Surge
February futures prices rose up to 20% earlier in the day, peaking at $4.201 per thousand cubic feet. Since January 4, 2023, when prices reached as high as $4.219 per thousand cubic feet, it has reached its highest level to yet. The February futures rise coincides with recent significant advances in natural gas, which is used for home heating. The commodity’s price has increased by over 58% this year and by approximately 9% in the last week.