U.S. natural gas price surge amid colder weather and rising LNG demand
Natural gas price
U.S. natural gas futures climbed 4% on Wednesday, reaching a one-week high due to forecasts for colder weather and increased heating demand. January gas futures on the New York Mercantile Exchange rose by 11.9 cents, or 3.8%, to $3.282 per million British thermal units (mmBtu), marking the highest close since November 29.
Analysts attributed the price surge to a colder weather outlook, with meteorologists projecting significantly lower temperatures across the Midwest, Ohio Valley, and Northeast. The U.S. weather model added 12 heating degree days (HDD) to its 15-day forecast. Heating demand was forecasted to increase by 17 billion cubic feet per day (Bcf/d) from Tuesday to Thursday, according to EBW Analytics Group.
Natural Gas futures chart (June 2024 - December 2024) Source: Trading View
Rising LNG Feedgas and supply constraints support prices
The volume of natural gas flowing to liquefied natural gas (LNG) export plants rose to an average of 14.0 Bcf/d in December, up from 13.6 Bcf/d in November. This increase came as Gulf Coast fog lifted, boosting LNG feedgas levels, according to Wood Mackenzie.
Meanwhile, U.S. natural gas production remained robust, averaging 102.8 Bcf/d in December, up from 101.5 Bcf/d in November. However, these levels were still below the record 105.3 Bcf/d set in December 2023.
Despite the current bullish trend, analysts warned of potential volatility ahead. Lower 48 forecasts show bearish temperatures after December 21, with warmer conditions expected across the East Coast. Additionally, the U.S. Energy Information Administration (EIA) is expected to report a bullish natural gas storage withdrawal of 176 Bcf, far exceeding the five-year average draw of 71 Bcf.
Looking ahead, weather-driven demand and LNG export trends are likely to remain key price drivers through the winter season.
