Natural gas prices have plunged since the December highs, following a spike above $4 per mmBtu in the fall after the hotter-than-expected late summer temperatures and sudden cold fall raised demand for cooling and heating, which dragged natural gas inventories to their lowest level in over a decade.
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While natgas stockpiles have recovered somewhat after the warmer weeks toward the end of 2018, a prolonged cold spell could increase demand and put pressure on inventories, bolstering gas prices.
“You would need to really sustain this cold through at least a third or half of February in order to get $4, even though we’ve made great progress in the five-year storage deficit over the last month,” Jacob Meisel, chief weather analyst at Bespoke Weather Services, told CNBC. “I still wouldn’t rule out $4 if the cold lasts long enough.”
For more information on the natgas market, visit our natural gas category.