Natural Gas Surges – Will the Rally Continue?

U.S. natural gas futures are climbing to their highest levels since 2022 amid concerns that cold weather could threaten supply just as demand for heating and electricity generation rises.

Next-month futures jumped 13%, reaching $5.502 per million British thermal units (MMBtu) at 1:53 p.m. Singapore time on Thursday. The gas market is on track to post its largest weekly gain on record since 1990, with prices rising more than 50% over the past two days.

Low temperatures could disrupt gas production in the southern U.S. due to frozen pipelines, potentially limiting supply at a time when consumption is expected to increase and reduce inventories.

Any production disruptions are likely to impact both Europe and Asia, which rely on the same U.S. LNG exports. Cold waves in both regions could also drive higher fuel demand.

U.S. weather forecasts have cooled significantly in recent days, with the National Oceanic and Atmospheric Administration projecting below-normal temperatures for roughly two-thirds of the country.

Elsewhere, cold weather is also driving energy prices higher. European gas futures have risen over 18% in the past week, while electricity prices in Japan hit a three-month high on Wednesday.