Cold Weather Lifts US Natural Gas Prices

Forecasts of a more extended November cold snap across the US sent natural gas prices to a near two-year high, as investors worry about rising demand at a time when supplies are at the lowest level to start the winter heating season in 15 years.
Natural gas futures for December spiked more than 6% to $3.76 per million British Thermal Units, the highest price since December 2016, CNBC reported.
“We added a lot of heating demand over the last week,” said Jacob Meisel, chief weather analyst at Bespoke Weather Services on Friday. “This morning, there are more risks that the cold is going to linger a bit longer through November, not at the same intensity but it’s enough to scare a market that has low storage levels and already has strong physical prices.”
Weekly government data Thursday showed the amount of natural gas in US storage facilities rose by 1.8 billion cubic meters to 90.8 billion cubic meters in the week ended Nov. 2, but that is still 15% below the year-ago level and 16% below the five-year average.

 Possibility of Shortages 

“I think we’re looking at the potential for shortages towards the end of the season, depending on how the winter goes,” said John Kilduff, partner with Again Capital. In recent years, the US has started the heating season with record supplies that were largely depleted by the end of the season.
Kilduff said, however, the amount of gas in storage this year at the Nov. 1 start of the winter heating season is unusually low. The last time supplies were this low in the first week of November was in 2003, and that year natural gas prices hit $12 per mbtu.
“Now we’re going into the winter 15% in the hole, and prices could double or triple from here,” said Kilduff. He said gas prices could easily cross the psychological threshold of $4 per mbtu for the first time in two years.