NEW YORK: US natural gas futures soared about 7% to a 10-week high on Friday ahead of the long Martin Luther King Day holiday weekend when extreme cold is expected to boost gas demand to record highs while also cutting gas supplies by freezing wells.

In recent years, the combination of soaring demand for gas for heating and power generation at the same time that supplies of the fuel are declining due to freezing wells during massive storms has threatened the reliability of electric and gas systems. This has forced electricity grid operators and utilities to impose rotating outages because many power plants cannot operate due to a lack of fuel or other reasons.

That is what happened in Texas and other US Central states in February 2021 when millions were left without power, water and heat for days, and during Winter Storm Elliott in December 2022 when dozens of power plants shut across the eastern half of the country and New York City’s gas supply system was close to collapse.

Front-month gas futures for February delivery on the New York Mercantile Exchange rose 21.6 cents, or 7.0%, to settle at $3.313 per million British thermal units (mmBtu), their highest close since Nov. 3.

That kept the front-month in technically overbought territory for a second day in a row and boosted the premium of futures for February over March to 72 cents per mmBtu, their highest since mid- December 2022.

That also put the front-month up by 15% for a second week in a row.

In a sign of what may be coming, extreme cold was already freezing the Pacific Northwest region. That kept next-day power prices at the Mid-Columbia hub in Oregon at a 16-month high of around $850 per megawatt hour for a second day in a row, while next-day gas prices at the AECO hub in Alberta, Canada, soared to a near one-year high of $2.68 per mmBtu.

For comparison, Mid Columbia power prices averaged $81 per MWh and AECO gas prices averaged $1.86 per mmBtu in 2023.