Natural Gas: US Natural Gas rises above $6 for the first time since 2022. In fact, due to extreme cold in most parts of the country, demand for heating has increased, while on the other hand, due to interruption in supply, prices have increased.
Futures for February delivery rose as much as 19% to $6.288 per million British thermal units in early Asian trading on Monday. Earlier last week there had been a rise of 70%, which was the biggest weekly gain in records since 1990.
The winter storm is estimated to have knocked about 10% of US natural gas production offline. At the same time as demand for heating and power-plant fuel increased. The massive freeze has strained power grids and disrupted transport links, grounding thousands of flights.
The largest US grid operator is pressuring power plants to secure supplies of natural gas this week as extreme cold is expected to push electricity use to winter records. Gas flow at US liquefied natural gas export plants has dropped to its lowest in a year due to production disruptions caused by winter storms.
Natural gas prices hit their highest since December 2022, as European demand for US LNG surged after Russia’s invasion of Ukraine at the beginning of the year cut supplies from Russia.
The impact on next month’s prices is also increasing because the February contract is ending on Wednesday, due to which liquidity is very low. Open-interest on Monday was less than 25,000 contracts, compared with 340,000 contracts for March futures. The March contract rose 11% to $3.997 per million Btu.