Natural-gas prices have fluctuated wildly this year as gas has become a key weapon in an economic war involving Russia, Europe, and the United States.
But even with massive geopolitical forces moving markets these days, more prosaic issues matter too. Lately, natural-gas prices have been moving because of the weather.
U.S. natural gas futures were up 10% on Monday to $7.06 per million British Thermal Units, largely because the weather forecast in the U.S. is looking chillier-than-normal for the next week or so. The National Oceanic and Atmospheric Administration (NOAA) forecast that most of the country will experience colder-than-average temperatures for the next 6 to 10 days.
A particularly cold winter could force demand much higher, because natural gas is used for heating and electricity. Weather remains a key determinant of the path of prices.
"The steep gains of the past week may ultimately prove unjustified on a seasonal basis," said a report published Monday by EBW Analytics Group, which researches gas markets. "Nonetheless, further market attention on the coming cold blast and likely short-covering can still drive further near-term gains."
In addition, a terminal in Texas called Freeport LNG that is designed to send natural gas overseas is almost fully repaired and more U.S. gas is expected to be exported in the coming months. That should increase overall demand and boost U.S. prices. Prices were already up 13% last week.
Stocks of natural gas producers were rising fast on Monday. EQT (ticker: EQT) was up 7.6%, Southwestern Energy (SWN) rose 7.8%, CNX Resources (CNX) increased 3.5%, and Range Resources (RRC) was up 6.7%.
The stocks had been trading flat for a few weeks as Europe's natural gas shortage appeared to be less dire , pushing overseas prices down. Europe successfully boosted its storage levels ahead of the winter, meaning the continent may be less desperate for U.S. gas for the next few months.
Natural gas has been unpredictable this year because of the war in Ukraine and an overall shortage of supplies. It has traded between $3.56 and $9.68 over the past 52 weeks, a much wider range than it has historically.