U.S. natural gas futures surged as forecasts for colder January weather increased demand projections for heating and power generation fuels.
On Monday, U.S. natural gas for February delivery jumped 16%, closing at $3.936 per million British thermal units. This marked the largest single-day gain since trading began in 2012.
During the session, the most actively traded contracts reached a two-year high at one point.
The National Weather Service recently predicted that temperatures across the eastern and midwestern U.S. from February 8 to 14 will likely be colder than average.
This sharply contrasts the predominantly mild fall and early winter the U.S. has experienced so far.
Early forecasts for next month indicate a significant nationwide temperature drop, affecting regions from Texas to Michigan and Georgia.
NatGasWeather reports that this shift has already sparked optimism regarding energy demand, which was expected to rise this winter.
Energy trader and BOK Financial analyst Dennis Kissler noted that these cold weather predictions fuel bullish sentiment.
Monthly gas futures remained below $3 throughout the year due to abundant domestic production in the shale sector.
However, analytics firm AnalyticsAI warns that the impending cold snap could freeze some wellheads, potentially limiting gas production in the Appalachian Marcellus shale region.
Future demand growth is expected to be bolstered by increased LNG export consumption along the Gulf Coast, including expansions at Cheniere Energy’s Corpus Christi LNG facility and Venture Global LNG’s second plant, Plaquemines LNG.
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