NEW YORK: US natural gas futures gained about 2% on Tuesday, putting the contract on track for its highest close in 13 years for a second day in a row, with a sharp drop in US output and on expectations freezing weather in Alberta, Canada will move into the United States next week and boost heating demand. Traders noted US gas prices were also being pulled higher on Tuesday by a 4% jump in global crude and other energy futures.
US gas futures have already soared about 82% so far this year with much higher prices in Europe keeping demand for US liquefied natural gas (LNG) near record highs as several countries try to wean themselves off Russian gas after Russia invaded Ukraine on Feb. 24.
Front-month gas futures rose 14.2 cents, or 2.1%, to $6.785 per million British thermal units (mmBtu) at 8:16 a.m. EDT (1216 GMT), putting the contract on track to hit its highest close since November 2008 for a second day in a row. Traders noted one of the more surprising observations about the recent US price run-up is that while US gas prices have soared about 44% over the past month, European gas, currently trading around $33 per mmBtu, fell about 23% as Russia keeps sending supplies to Europe via pipeline and LNG vessels keep delivering cargoes.
Analysts said in addition to high LNG demand, US prices were rising on domestic concerns, including growing worries that cooler weather in April will keep heating demand high enough to prevent utilities from injecting much gas into storage. US gas stockpiles were currently around 17% below the five-year (2017-2021) average for this time of year.
In the spot market, gas prices for Tuesday at the AECO hub in Alberta rose to their highest since March 2014 as homes and businesses crank up their heaters to escape a spring freeze.
AccuWeather forecast high temperatures in Calgary, the biggest city in the province, would remain below freezing for much of this week. That compares with a normal high of around 51 degrees Fahrenheit (10.6 Celsius) in the city at this time of year.
Traders noted that Alberta’s cold, expected to reach the United States next week, would reduce gas exports from Canada. Already, prices in Chicago, which gets some gas from Alberta, rose to their highest since the February freeze in 2021.
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