Following a massive winter storm sweeping across the entire United States, natural gas prices surged by 17.7% on Monday morning (January 26), breaking the $6 mark for the first time since the end of 2022.
The natural gas futures for February delivery rose by 17.7%, or 93 cents, to $6.21 per million British thermal units (BTU) at 11:46 London time (6:46 a.m. Eastern time), setting a new 52-week high.
This marks the first time since December 2022 that contracts of this kind have crossed the $6 mark. Prices have increased by approximately 68% so far this year. The last time this level was surpassed was in December 2022, following Russia’s full-scale invasion of Ukraine, which led to a surge in Europe’s demand for U.S. liquefied natural gas.
The powerful winter storm has left hundreds of thousands of people in the U.S. without power, increasing the demand for natural gas among residents.
Extreme weather conditions such as cold snaps and winter storms can cause widespread power outages. Frozen natural gas pipelines can lead to reduced supply, while people increase their demand for natural gas heating due to power shortages, resulting in a supply-demand imbalance that drives up spot prices.
According to PowerOutage.us, as of later Sunday afternoon (January 25), over 822,000 customers were without power. The website collects real-time outage data from utility companies across the U.S.
The Department of Energy in the United States issued two emergency orders on Monday to alleviate the power outages in the New England region and Texas, aiming to maintain grid stability and minimize the risk of outages.
Energy Secretary Chris Wright stated in a press release on Monday, “Maintaining a price-reasonable, reliable, and secure supply of electricity is non-negotiable as the winter storm brings extreme cold and dangerous weather across the country.”
The National Weather Service (NWS) predicts that although the winter storm is nearing its end, the extensive snowfall and “disastrous freezing” from the Southern Rockies to the New England region will persist through the weekend, affecting at least 180 million people across 37 states.
NWS announced on social media on Sunday that two-thirds of the eastern United States will continue to experience “feels like” temperatures as low as minus 50 degrees Fahrenheit (approximately minus 45.5 degrees Celsius), with temperatures well below normal expected to last through early February.
The extreme cold weather has already resulted in at least 11 deaths, with snow and wind causing transportation disruptions and massive flight cancellations. Some cities have declared school closures or shifted to remote learning.
(This article references reporting by CNBC)