U.S. natural gas futures experienced a significant surge, marking their highest increase since late October, as forecasts indicated a return of cold weather to the eastern half of the Lower 48 states. This uptick in prices comes as an energy trader emphasized that “winter isn’t over,” with a new wave of cold air expected to arrive early next week. While much of the country has recently enjoyed a brief warm spell following an early-month polar vortex, the forecast suggests a return to unseasonably chilly conditions.
According to energy trader Celsius Energy, the upcoming cold blast is poised to impact major population centers across the Eastern United States. They shared on social media that the forecast anomalies for next week indicate a significant area of lower temperatures. This anticipated cold snap is expected to increase demand for natural gas, prompting fluctuations in daily storage withdrawals.
By late afternoon on Tuesday, natural gas futures had risen nearly 10%, marking the largest intraday increase since a 17% spike on October 30. Prices were trading around $4.365 per MMBtu, reflecting a notable shift in the market dynamics as colder temperatures loom.
Demand Projections and Heating Degree Days
The demand for natural gas is projected to be quite volatile in the near term, with daily storage withdrawals expected to shift from a bearish +5 BCF/d through the weekend to nearly -30 BCF/d by the following week. This anticipated demand surge is more than double the five-year average, indicating a significant increase in heating needs as colder weather returns.
The Heating Degree Days index, which measures the demand for heating in the U.S., is projected to rise well above the 30-year average early next week and remain elevated through the year-end. As the forecast indicates a return to colder conditions, residents in the eastern half of the Lower 48 are advised to prepare for the winter weather ahead.
As temperatures drop, individuals are reminded to stock up on essentials for the colder days to come, including firewood and snow removal equipment. The shift in weather patterns has prompted a watchful eye on the natural gas market, with analysts and traders keenly observing the developments.
This combination of fluctuating temperatures and increasing demand underscores the ongoing volatility in the energy market and its direct impact on consumers. With winter still in full swing, the situation is poised to evolve as the cold weather settles into the eastern regions.
