A winter cold blast is causing natural gas to spike.
That’s what Phil Flynn, a senior market analyst at the PRICE Futures Group, told Rigzone in an exclusive interview on Monday when asked why the U.S. natural gas price is rising today.
Flynn, who highlighted to Rigzone that the commodity “open[ed]… up over 10 percent higher” said “predictions of an arctic cold blast, and the possibility that this January may be the coldest in 30 years, is suddenly changing the fundable”.
“Not only will we see record demand but also the possibility of natural gas production freeze offs,” Flynn warned.
The PRICE Futures Group senior market analyst told Rigzone that the natural gas market “hasn’t really had to face a real winter”.
“Now we will test the bearish narratives in the market,” Flynn added.
When he was asked why the U.S. natural gas price is rising today in a separate exclusive interview on Monday, Gabriel Odiase, an analyst at the Agriculture and Horticulture Development Board (AHBD), said, “mainly uncertainties around the renewal, or not, of the major contract for transporting Russian gas through Ukraine, which is set to expire at the end of December”.
“This contract, between Russia’s Gazprom and Ukraine’s Naftogaz, has been key for delivering Russian gas to Europe,” Odiase told Rigzone.
“The contract expiry could shape Europe’s gas supply and market dynamics. This may potentially increase demand for LNG, as cover, at the start of the new year,” Odiase went on to state.
The U.S. Energy Information Administration’s (EIA) latest weekly natural gas storage report, which was released on December 27 and includes data for the week ending December 20, stated that “working gas in storage was 3,529 billion cubic feet as of Friday, December 20, 2024, according to EIA estimates”.
“This represents a net decrease of 93 billion cubic feet from the previous week. Stocks were 14 billion cubic feet higher than last year at this time and 166 billion cubic feet above the five-year average of 3,363 billion cubic feet,” the report added.
“At 3,529 billion cubic feet, total working gas is within the five-year historical range,” the EIA report went on to state.
The EIA’s next weekly natural gas storage report is scheduled to be released on January 3. It will show data for the week ending December 27.
In its latest short term energy outlook (STEO), which was released in December, the EIA raised its Henry Hub natural gas spot price forecast for 2024 and 2025.
According to its December STEO, the EIA sees the Henry Hub spot price averaging $2.19 per million British thermal units (MMBtu) in 2024 and $2.95 per MMBtu in 2025. The EIA’s previous November STEO projected that the Henry Hub spot price would average $2.17 per MMBtu in 2024 and $2.90 per MMBtu in 2025.
In another exclusive interview, ex-Independent Petroleum Association of America (IPAA) Chief Economist Frederick J. Lawrence told Rigzone on December 19 that natural gas prices had “rallied over the past two days based on forecasts of colder weather anticipated in January”.
“In addition to more frosty weather arriving after the Christmas holiday, natural gas storage also proved more robust as of December 13. The latest storage number showed a net decrease in storage of 125 billion cubic feet compared to the previous week,” he added.
“Stocks at 3,622 billion cubic feet remain 20 billion cubic feet higher than last year and 123 billion cubic feet higher than the five year average,” he went on to state.
To contact the author, email
