Natural gas prices for near-term delivery at regional trading hubs across the US jumped as the market braced for a historic winter storm that’s poised to send temperatures plummeting and boost demand for the heating fuel.
So-called cash prices for gas at the benchmark Henry Hub in Louisiana to be delivered over the weekend surged early Friday to $18.80 per million British thermal units, according to traders. That compares with $8.42 on Thursday.
Spot prices at the SoCal Citygate hub in California traded as high as $8 per million Btu as gas volumes delivered via pipeline from the Permian Basin in West Texas to the West Coast have likely been reduced, traders said. That’s up from $4.42 on Thursday.
This week’s surge has been driven by forecasts for below-normal temperatures across most of the country, threatening to boost gas consumption and drain inventories. The freeze — particularly in the southern gas-producing states — has raised concerns about water icing in pipelines, potentially disrupting output starting this weekend.
US natural gas futures for February delivery, meanwhile, rose for a fourth straight day. They were up 6.3% to $5.362 per million Btu as of 9:22 a.m. in New York, heading for their biggest weekly gain in records going back to 1990.
The shift in US weather forecasts came days after hedge funds turned more bearish on gas at the end of last week, leaving the market poised for a rally as traders rushed to close out those wagers. Gas prices briefly climbed above $5.50 per million Btu on Thursday, a level that a Citigroup Inc. analysis on Thursday showed would wipe out all shorts.
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