[Christian Harris]

Natural gas futures have surged to their highest levels since December 2022, reaching $4.24/MMBtu, as a severe cold snap grips the United States.

This Arctic chill has significantly boosted heating demand while simultaneously causing production freeze-offs, creating a perfect storm for price increases.

The current market dynamics are driven by several key factors.

First, weather forecasts predict colder-than-normal temperatures across the Lower 48 states through February 22, which is maintaining elevated demand levels.

Additionally, production has declined by 6.7 billion cubic feet per day (bcfd) over the past 13 days, hitting a four-week low of 100.1 bcfd due to well freezes.

Moreover, gas flows to LNG export plants have reached all-time highs, averaging 15.4 bcfd in February, compared to 14.6 bcfd in January.

Concerns regarding storage levels are also prominent; the upcoming EIA report is expected to show a significant draw of 191 billion cubic feet (bcf) last week, which is substantially higher than the previous week’s decrease of 100 bcf.

The current supply-demand imbalance has created a volatile pricing environment.

With storage levels below the five-year average and global demand on the rise, market participants should remain vigilant.

Traders and analysts are advised to closely monitor weather forecasts, as short-term temperature predictions can significantly impact near-term price movements.

Additionally, weekly EIA reports provide crucial insights into supply adequacy, while the speed at which freeze-offs resolve will influence supply dynamics.

Global LNG demand is another critical factor; shifts in international markets can affect domestic prices through export demand.

As we move through 2025, forecasts suggest that natural gas prices may moderate, with Trading Economics projecting a price of $3.56/MMBtu in 12 months.

However, given the current market volatility, these projections should be viewed cautiously.

(Click to enlarge)

Sources: eToro, Trading Economics

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