Extreme cold boosts heating demand, cuts output by freezing wells
Gas output drops to three-month low due to freeze-offs
Market ignoring smaller-than-usual storage withdrawal
Adds latest prices
By Scott DiSavino
NEW YORK, Jan 22 (Reuters) - U.S. natural gas futures soared by a record 63% over three days to a six-week high on Thursday on forecasts that extreme cold over the next two weeks will boost heating demand to near-record levels, while also cutting output by freezing oil and gas wells.
On Thursday, front-month gas futures for February delivery NGc1 on the New York Mercantile Exchange (NYMEX) rose 17 cents, or 3.5%, to settle at $5.045 per million British thermal units (mmBtu), their highest close since December 5.
In intraday trade, prices rose as much as 16% to $5.65 per mmBtu on Thursday, their highest since December 2022. Analysts noted that prices pulled back from those intraday highs after the latest afternoon weather forecasts, which still called for extreme cold over the next week, but were not as frigid as the morning forecasts.
Analysts said traders mostly ignored the U.S. Energy Information Administration storage release that showed energy firms pulled just 120 billion cubic feet of gas out of storage during the week ended January 16 when the weather was still warmer than normal.
That reading was bigger than the 106-bcf withdrawal analysts forecast in a Reuters poll, but below a decline of 228 bcf during the same week last year and an average withdrawal of 191 bcf over the past five years (2021-2025). EIA/GASNGAS/POLL
Even though that smaller-than-usual withdrawal left stockpiles about 6% above normal levels for this time of year, analysts said utilities will likely wipe out that excess inventory and pull massive amounts of gas from storage to provide fuel to keep homes and businesses warm over the next two weeks of extreme cold.
SUPPLY AND DEMAND
Financial firm LSEG said average gas output in the Lower 48 states has slid to 108.6 billion cubic feet per day (bcfd) so far in January, down from a monthly record high of 109.7 bcfd in December.
On a daily basis, output was on track to drop to a three-month low of 106.1 bcfd on Thursday due mostly to reductions in North Dakota and Oklahoma, according to LSEG data, down from a recent high of 110.0 bcfd on January 12 and an all-time daily high of 111.2 bcfd on December 21.
Analysts noted some of the output decline seen so far this week - down about 3.9 bcfd since January 12 - was due to freezing oil and gas wells, known in the energy industry as freeze-offs.
In past winters, freeze-offs have slashed gas output by massive amounts, including the loss of around 17.2 bcfd from January 8-16 in 2024, cuts of 15.8 bcfd from December 20-24 in 2022, and the drop of 20.4 bcfd from February 8-17 in 2021, according to LSEG data.
Meteorologists projected weather across the country would remain mostly colder than normal through February 6, with the most frigid days expected around January 24-31.
LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 152.4 bcfd this week to 162.1 bcfd next week. Those forecasts were higher than LSEG's outlook on Wednesday.
With temperatures forecast to average just 22.0 degrees Fahrenheit (-5.6 Celsius) across the country on January 24 and continue averaging in the low 20s F through January 31, LSEG projected total demand, including exports, would reach 180.6 bcfd on January 26. That demand forecast was higher than LSEG's outlook on Wednesday.
But that figure would fall just short of the Lower 48 daily demand record of 181.2 bcfd set on January 21, 2025, when temperatures across the country averaged just 19.4 F, according to LSEG data.
Average gas flows to the eight large U.S. LNG export plants have held at 18.5 bcfd so far in January, matching the monthly record high set in December.
Shares of Venture Global VG.N surged nearly 8% on Thursday after an arbitration tribunal ruled in favor of the U.S. LNG producer in a dispute with Spanish energy firm Repsol REP.MC.
Week ended Jan 16 Actual | Week ended Jan 9 Actual | Year ago Jan 16 | Five-year average (2021-2025) Jan 16 | ||
U.S. weekly natgas storage change (bcf): | -120 | -71 | -228 | -191 | |
U.S. total natgas in storage (bcf): | 3,065 | 3,185 | 2,924 | 2,888 | |
U.S. total storage versus 5-year average | +6.1% | +3.4% | |||
Global Gas Benchmark Futures ($ per mmBtu) | Current Day | Prior Day | This Month Last Year | Prior Year Average 2025 | Five-Year Average (2021-2025) |
Henry Hub NGc1 | 5.55 | 4.88 | 3.72 | 3.62 | 3.79 |
Title Transfer Facility (TTF) TRNLTTFMc1 | 13.33 | 13.32 | 14.67 | 11.94 | 18.51 |
Japan-Korea Marker (JKM) JKMc1 | 11.34 | 10.81 | 14.16 | 12.24 | 18.12 |
LSEG U.S. Global Forecast System $(GFS)$ Heating, Cooling and Total Degree Days | |||||
Two-Week Total Forecast | Current Day | Prior Day | Prior Year | 10-Year Norm | 30-Year Norm |
U.S. GFS Heating Degree Days (HDD) | 592 | 552 | 487 | 435 | 451 |
U.S. GFS Cooling Degree Days (CDD) | 1 | 1 | 1 | 3 | 3 |
U.S. GFS Total Degree Days (TDD) | 593 | 553 | 488 | 438 | 454 |
LSEG U.S. Weekly GFS Supply and Demand Forecasts | |||||
Prior Week | Current Week | Next Week | This Week Last Year | Five-Year (2021-2025) Average for Month | |
U.S. Supply (bcfd) | |||||
U.S. Lower 48 Dry Production | 109.0 | 107.3 | 107.3 | 101.1 | 98.6 |
U.S. Imports from Canada | 9.7 | 10.5 | 9.8 | N/A | 9.6 |
U.S. LNG Imports | 0.1 | 0.1 | 0.0 | 0.1 | 0.1 |
Total U.S. Supply | 118.8 | 117.9 | 117.1 | N/A | 108.3 |
U.S. Demand (bcfd) | |||||
U.S. Exports to Canada | 3.8 | 3.0 | 3.0 | N/A | 2.9 |
U.S. Exports to Mexico | 6.1 | 5.9 | 5.8 | N/A | 5.8 |
U.S. LNG Export Feedgas | 18.3 | 18.8 | 18.6 | 13.4 | 12.8 |
U.S. Commercial | 15.9 | 19.8 | 24.8 | 23.2 | 17.3 |
U.S. Residential | 26.5 | 33.6 | 43.9 | 41.0 | 29.9 |
U.S. Power Plant | 32.1 | 35.8 | 38.5 | 40.9 | 32.5 |
U.S. Industrial | 25.4 | 26.7 | 28.2 | 27.7 | 26.0 |
U.S. Plant Fuel | 5.4 | 5.3 | 5.3 | 5.4 | 5.2 |
U.S. Pipe Distribution | 2.9 | 3.3 | 3.9 | 2.9 | 4.4 |
U.S. Vehicle Fuel | 0.1 | 0.1 | 0.1 | 0.1 | 0.2 |
Total U.S. Consumption | 108.3 | 124.7 | 144.8 | 141.2 | 115.5 |
Total U.S. Demand | 136.6 | 152.4 | 172.1 | N/A | 137.0 |
N/A = Not Available | |||||
U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam (Fiscal year ending Sep 30) | 2026 Current Day % of Normal Forecast | 2026 Prior Day % of Normal Forecast | 2025 % of Normal Actual | 2024 % of Normal Actual | 2023 % of Normal Actual |
Apr-Sep | 94 | 95 | 76 | 74 | 83 |
Jan-Jul | 94 | 95 | 78 | 76 | 77 |
Oct-Sep | 99 | 99 | 80 | 77 | 76 |
U.S. weekly power generation percent by fuel - EIA | |||||
Week ended Jan 23 | Week ended Jan 16 | 2025 | 2024 | 2023 | |
Wind | 11 | 13 | 11 | 11 | 10 |
Solar | 5 | 5 | 6 | 5 | 4 |
Hydro | 7 | 7 | 6 | 6 | 6 |
Other | 1 | 1 | 1 | 1 | 2 |
Petroleum | 0 | 0 | 0 | 0 | 0 |
38 | 36 | 40 | 42 | 41 | |
Coal | 20 | 17 | 18 | 16 | 17 |
Nuclear | 19 | 20 | 18 | 19 | 19 |
SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu) | |||||
Hub | Current Day | Prior Day | This Month Last Year | Prior Year Average 2025 | Five-Year Average (2021-2025) |
Henry Hub NG-W-HH-SNL | 4.96 | 4.00 | 4.13 | 3.52 | 3.72 |
Transco Z6 New York NG-CG-NY-SNL | 4.72 | 3.70 | 8.77 | 3.53 | 3.56 |
PG&E Citygate NG-CG-PGE-SNL | 2.99 | 2.50 | 3.87 | 3.42 | 5.47 |
Eastern Gas (old Dominion South) NG-PCN-APP-SNL | 4.52 | 3.24 | 3.74 | 2.79 | 2.96 |
Chicago Citygate NG-CG-CH-SNL | 4.83 | 3.72 | 3.93 | 3.23 | 3.60 |
Algonquin Citygate NG-CG-BS-SNL | 12.55 | 14.75 | 15.67 | 6.08 | 5.04 |
SoCal Citygate NG-SCL-CGT-SNL | 3.69 | 3.22 | 4.49 | 3.60 | 5.71 |
Waha Hub NG-WAH-WTX-SNL | 1.48 | 0.60 | 3.27 | 1.15 | 2.88 |
AECO NG-ASH-ALB-SNL | 1.98 | 1.65 | 1.22 | 1.13 | 2.13 |
ICE U.S. Power Next-Day Prices ($ per megawatt-hour) | |||||
Hub | Current Day | Prior Day | This Month Last Year | Prior Year Average 2025 | Five-Year Average (2021-2025) |
New England E-NEPLMHP-IDX | 100.75 | 143.14 | 147.88 | 77.61 | 61.79 |
PJM West E-PJWHRTP-IX | 49.48 | 58.00 | 75.11 | 60.23 | 54.47 |
Mid C W-MIDCP-IDX | 40.70 | 30.37 | 52.79 | 44.81 | 68.96 |
Palo Verde W-PVP-IDX | 36.50 | 30.50 | 44.47 | 34.82 | 59.94 |
SP-15 W-SP15-IDX | 40.71 | 36.59 | 39.98 | 28.44 | 53.02 |
(6Reporting by Scott DiSavino; Editing by Franklin Paul and Paul Simao)
((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters Messaging: scott.disavino.thomsonreuters.com@reuters.net/))
Comments