U.S. Natural Gas Pulls a 1990s-Style Rip as Arctic Blast Knocks Out Supply (Traders Panic)

Homeowner with Gas Heat: All you poors that have heat pumps (read: electric heat) are gonna be screwed…

Natural Gas prices: Who’s gonna tell him?

For all you peeps who thought the worst thing about this historic snow would be having to shovel your driveway twice and having to use your hotspot to work on your computer (me right now)... winter clearly had other plans. 

U.S. natural gas prices skyrocketed nearly 20% overnight as an Arctic blast torpedoed supply, spiked heating demand, and reminded everyone that energy pricing works… right up until the weather ignores it.

If you want the numbers, front-month gas futures surged past $6 per million Btu for the first time since 2022, piling onto a 70% rally last week, which now stands as the biggest weekly gain on record going back to 1990 (back when energy traders used phones with cords).

(Source: CNBC)

So why are energy bills about to feel personal, unless you live somewhere that still thinks winter means 62 degrees (looking at you, Miami)?

Turns out, freezing temperatures knocked almost 10% of U.S. natural gas production offline just as demand surged, creating a supply squeeze that ripped through the system faster than anyone had time to hedge.

The cold snap quickly spilled beyond energy markets, straining electricity grids, jamming transportation, and grounding thousands of flights… a reminder that infrastructure works great right up until nature ignores the plan.

At the same time, export hubs in Texas and Louisiana took bigger hits than traders anticipated, sending U.S. LNG flows to their lowest level in a year and adding even more fuel (no pun intended) to the price spike.

And speaking of global markets…

Natural gas prices are now back at levels last seen in December 2022, when Europe was hoarding U.S. LNG after Russia’s invasion of Ukraine destroyed its energy supply chain. In other words: different crisis, same outcome… prices doing parkour.

IThe biggest wildcard right now is how long production stays disrupted.

Grid operators are already pushing power plants to lock in supply through the week as electricity usage threatens to hit winter records. Translation: nobody wants to be the guy who underestimated cold weather and caused rolling blackouts.

Meanwhile, the market itself is offering zero forgiveness. Liquidity is thinner than Jonah Hill on Ozempic… and it’s only getting worse as the February contract expires Wednesday. And as you know, when open interest dries up, price swings stop asking for permission.

(Source: Bloomberg)

In fact, that’s exactly what’s happening now. March futures have already climbed as much as 11%, February has jumped 19%, and the market has shifted into full reaction mode.

If the cold sticks around longer than expected (or production takes its sweet time coming back) this move might not be done. If conditions ease, expect a sharp move back in the other direction.

Either way, congrats. You’re now living in a country where weather forecasts can move commodity markets harder than Trump invading Venezuela.

At the time of publishing this article, Stocks.News doesn’t hold positions in companies mentioned in the article.