Natural Gas Futures Prices Surge to 52-Week High Amid Colder Temperature Outlook
Price Spike
Natural gas futures prices surged on Monday, reaching a new 52-week high after reports of a colder-than-usual temperature outlook for January. February futures rose nearly 19% during the session, reaching a high of $4.201 per thousand cubic feet, its highest level since January 4, 2023.
Temperature Forecast
The Weather Co. and Atmospheric G2’s updated outlook, released on Sunday, predicted that the temperature forecast for next month will be colder than average in the East, specifically from Florida to Maine, as well as certain parts of the Great Lakes. The West, on the other hand, is expected to see temperatures come in milder than average. The "Four Corners" region, which includes the southwestern corner of Colorado, southeastern corner of Utah, northeastern corner of Arizona, and northwestern corner of New Mexico, is expected to be the most above average.
Regional Temperature Outlook
The report also warned that colder temperatures in the East could peak by mid-month, likely being "much farther below average" when compared with the entire month’s forecast for the eastern U.S. However, it is still unclear how temperatures will take hold in January’s second half.
Weather Forecast
AccuWeather meteorologists reported that the colder air could set up a "stormy pattern," with areas seeing "substantial snow and ice" for a significant portion of the month’s first half. They added that the drop will begin in the middle and latter part of next week.
Impact on Natural Gas Production
John Kilduff of Again Capital said on CNBC’s "Squawk on the Street" that natural gas "freeze offs" could take place, meaning disruptions in natural gas production flows. "We are talking [about] bone-chilling polar vortex weather, which has caused this spike in natural gas this morning," he said.
Market Reaction
Earlier in the session, February futures prices advanced as much as 20% and hit a high of $4.201 per thousand cubic feet, marking its highest level since January 4, 2023. Natural gas prices have seen major gains as of late, jumping nearly 9% in the past week and about 58% this year.
Commodity Market
Meanwhile, Brent crude futures rose 33 cents to $74.50 a barrel, while U.S. West Texas Intermediate crude gained 92 cents to $71.52 a barrel.
Conclusion
The surge in natural gas prices is a result of the colder-than-usual temperature outlook for January, with prices reaching a 52-week high. The report by The Weather Co. and Atmospheric G2 has caused a significant increase in natural gas futures prices, with February futures rising nearly 19% during the session.
FAQs
Q: What is the current price of natural gas futures?
A: The current price of natural gas futures is $4.201 per thousand cubic feet.
Q: What is the temperature forecast for January?
A: The temperature forecast for January is expected to be colder than average in the East, with the West expected to see temperatures come in milder than average.
Q: What is the impact of the colder temperatures on natural gas production?
A: The colder temperatures could lead to natural gas "freeze offs," meaning disruptions in natural gas production flows.
Q: What is the current price of Brent crude?
A: The current price of Brent crude is $74.50 a barrel.
