Natural Gas Soars as Arctic Blast Freezes US Supply
Futures have surged nearly 60% in three days amid record heating demand and production cuts in Texas, lifting shares of energy producers.
U.S. natural gas futures charged higher on Wednesday, capping a nearly 60% rally over the past three days as a severe arctic blast settled over the country, simultaneously sending heating demand to record highs and freezing supply at the wellhead.
The front-month natural gas contract surged 8.35% to trade near $5.00 per million British thermal units (MMBtu), a level not seen in months. The dramatic price move reflects a dual shock to the energy system, creating a bullish environment for natural gas producers.
The primary driver is a weather system that has blanketed the majority of the U.S. in frigid temperatures. The intense cold is projected to drive natural gas demand for heating and power generation to record levels. According to data from Natural Gas Intel, demand in the lower 48 states is expected to climb significantly as households and businesses crank up their thermostats.
Compounding the demand surge is a critical supply squeeze caused by the same freezing temperatures. In Texas, a hub for natural gas production, the intense cold is causing 'freeze-offs'—a phenomenon where liquids in pipes at the wellhead freeze, blocking the flow of gas. This has curtailed output at a time when the market needs it most. Recent reports indicate that the freeze-offs are already taking a measurable toll on production volumes, tightening the nation's supply balance.
The market reaction has lifted the fortunes of natural gas producers. Shares of EQT Corporation (NYSE: EQT), the nation's largest natural gas producer, jumped 6.22% to $54.68 in Wednesday trading. Similarly, Coterra Energy (NYSE: CTRA), another major player with significant natural gas assets, saw its stock rise 2.19% to $26.80.
This week's deep freeze is a stark reminder of the gas market's volatility and its vulnerability to extreme weather, echoing the events of the 2021 winter storm Uri. While U.S. natural gas inventories were at healthy levels above the five-year average just weeks ago, analysts expect this cold snap to trigger substantial withdrawals, rapidly eroding that surplus. Traders are now closely watching weather forecasts and production data to gauge whether the supply disruptions will worsen and how long the record-breaking demand will last.