US natural gas prices soared by over 5% on Monday, reaching approximately $3.30 per MMBtu. This spike brings prices close to the one-year high of $3.35 observed at the end of last week.
The main reasons for this increase are forecasts of colder weather and a drop in production. Utilities are responding by starting to withdraw Gas from storage earlier than usual.
Gas Storage Dips Unexpectedly This Week
Data from the Energy Information Administration (EIA) showed that gas storage levels fell by 3 billion cubic feet in the week ending November 15th. Analysts had expected an increase of 5 billion cubic feet. This unexpected decline marks the first drop of the season. One factor contributing to lower storage is that producers cut back on output due to low prices in the previous week.
Recent weather forecasts predict colder-than-normal temperatures on the West Coast and in most parts of the country, except for the Gulf Coast.
Additionally, Europe faces supply concerns as the end of the year approaches. This has led to liquefied natural Gas (LNG) feed Gas flows reaching a 10-month high. Russia’s gas supply uncertainty is increasing Europe’s demand for more LNG. As a result, US natural gas prices are climbing.