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U.S. natural gas futures soared by a record 114% over five days to a three-year high on Monday after an Arctic blast over the weekend froze oil and gas wells and pipes, cutting gas production to a two-year low on Sunday.
On Monday, front-month gas futures for February delivery on the New York Mercantile Exchange rose $1.37, or 15.2%, to $6.644 per million British thermal units (mmBtu), putting the contract on track for its highest close since December 2022.
That price jump came despite a bearish drop in gas flows to all U.S. liquefied natural gas export plants over the weekend.29dk2902l
In the cash market, next-day gas and power prices soared to multi-year highs in several parts of the country, including a 265% gain at the U.S. Henry Hub benchmark in Louisiana to a record $30.72 per mmBtu, and a 379% gain at the Eastern Gas hub in Pennsylvania to a record $40.00.
Other gas hubs with multi-year highs included New England at $50.50 per mmBtu and New York at $61.48, their highest since January 2018, Chicago at $34.16, its highest since February 2021, and Waha in West Texas, which was up 566% to $17.16, its highest since January 2024.
In the power market, next-day prices in New England soared about 82% to $313 per megawatt hour, while PJM West prices in Pennsylvania and Maryland soared about 360% to around $413, their highest since January 2014.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 states dropped to 106.9 billion cubic feet per day (bcfd) so far in January, down from a monthly record high of 109.7 bcfd in December.
On a daily basis, output fell to a two-year low of 92.6 bcfd on Sunday due mostly to freezing wells in Texas and Louisiana, according to LSEG data. That compares with a recent high of 110.0 bcfd on January 12 and an all-time daily high of 111.2 bcfd on December 21.
Now that the worst of the Arctic blast is likely past, output was on track to slowly edge up to 95.5 bcfd on Monday.
That means output fell about 17.4 bcfd from January 13-25. In past winters, freezing wells, known as freeze-offs in the energy industry, have slashed gas output by massive amounts, including the loss of around 17.2 bcfd from January 8-16 in 2024, cuts of 15.8 bcfd from December 20-24 in 2022, and a drop of 20.4 bcfd from February 8-17 in 2021, according to LSEG data.
One billion cubic feet of gas can supply about 5 million U.S. homes for a day.
Even though meteorologists projected weather across the country would remain mostly colder than normal through February 10, energy analysts noted the coldest days were likely behind.
LSEG projected average gas demand in the Lower 48 states, including exports, would fall from 168.9 bcfd this week to 153.4 bcfd next week. Those forecasts were lower than LSEG’s outlook on Friday.
On a daily basis, LSEG reduced its forecast for total demand on January 26 to 178.6 bcfd on Monday, down from a forecast 181.4 bcfd on Friday due in part to the decline in gas flows to LNG export plants. If correct, total daily gas demand should remain below the all-time high of 181.2 bcfd set on January 21, 2025.
Average gas flows to the eight large U.S. LNG export plants fell to 17.9 bcfd so far in January, down from a monthly record high of 18.5 bcfd in December.
On a daily basis, LNG feedgas was on track to rise to 13.5 bcfd on Monday after dropping to a one-year low of 12.1 bcfd on Sunday due to reductions at all plants, including Freeport LNG in Texas and Elba Island in Georgia.
(Reporting by Scott DiSavino; Editing by Kirsten Donovan, Andrea Ricci and Chris Reese)
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