Natural gas futures soared Wednesday as energy markets brace for a powerful winter storm that threatens to derail production just as demand rises.
The latest spike will keep home heating costs for millions of Americans elevated, adding to a long list of inflationary headaches.
Natural gas futures surged 16% Wednesday to close at $5.50 per million British thermal unit (BTU). That’s near the highest level since last November. Natural gas futures have spiked 55% since sinking to $3.56 on December 30.
Trading in natural gas can be extremely volatile, especially during the winter when supply and demand can swing sharply.
Analysts blamed forecasts for a major winter storm that is expected to bring snow and ice to much of the United States. More than 100 million people are under winter weather alerts, from the Rockies to New England – including the energy powerhouse of Texas.
The storm will likely force Americans to crank up the heat, driving up demand for natural gas, the most common way to heat homes.
At the same time, energy traders are anticipating some production could get shut in due to unusually cold temperatures. That’s what happened early last year during the deep freeze and deadly blackouts in Texas, a leading producer of natural gas.
“When it freezes, infrastructure tends to break down,” said Robert Yawger, vice president of energy futures at Mizuho Securities. “I doubt the freeze will be as bad as last year, but it could easily have an impact.”