U.S. natural gas futures jumped by more than 45% in just two days as Arctic cold is descending on the eastern United States with freezing temperatures and warnings of dangerous life-threatening wind chills.
On Tuesday, the benchmark U.S. natural gas futures at Henry Hub soared by 23% amid the cold snap and short covering. Natural gas futures jumped by another 22% early on Wednesday, and were headed for their biggest weekly gain in 35 years.
The benchmark gas prices surged from $3.40 per million British thermal units (MMBtu) on Monday to over $4.70 per MMBtu early on Wednesday, as U.S. weather forecasts for the coming week are for much lower temperatures, driving a surge in heating demand.
Frosty air will advance across the Midwest and East the next few days with highs of 10s to 40s, lows of -0s to 30s for stronger national demand, according to NatGasWeather.com. A more impressive cold shot follows across the northern U.S. late this week into early next, week, including lows of 0s-30s into North Texas, the South, and Southeast. Expectations are for high demand in the week, and very high demand on the weekend.
Texas is bracing for snowfall this weekend, and if weather conditions cause issues with some of the state’s many gas-producing systems, supply could be temporarily disrupted, leading to more spikes in natural gas prices.
Cold snaps are also gripping Asia and Europe, with gas demand there rising, too, and tightening the global LNG market.
Weather remains the key driver of natural gas prices and speculative positioning across various regional benchmarks in the northern hemisphere.
Winter weather has driven heating demand in China higher and with it, LNG prices. The cold spell, which is forecast to extend into February, has thus reversed a price slide that began towards the end of 2025, Bloomberg reports, citing LNG price data from the Shanghai Petroleum and Natural Gas Exchange.
By Michael Kern for Oilprice.com
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