The price for a million British thermal units (MMBtu) of natural gas surged over 30% on Monday and has surpassed $6 for the first time since December 2022 as millions of Americans face the effects of Winter Storm Fern. With colder weather, demand for heating powered by natural gas increases, tightening supply and driving prices higher.
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“These volatile price movements are directly tied to escalating heating needs; massive, expected storage withdrawals; and production setbacks from freeze-offs,” said Price Futures Group senior market analyst Phil Flynn.
Gas Production Disruptions Meet Rising Heating Needs
The blistering weather has also affected natural gas production, with DNB Carnegie estimating 10% of U.S. production facing disruptions. At the same time, gas inventories were 4.8% higher compared to a year ago, which suggests that the price spike could be temporary, according to commodity strategists at ING.
Low temperatures are expected to persist this week, fueling continued demand for heating and keeping energy markets on edge.