Natural gas prices exploded on Monday, with spot prices soaring more than 10% as cold weather threatens the Northeastern part of the United States.
At 1:30 p.m. EST, the spot price for natural gas was $2.833 per MMBtu, a 10.49% increase on the day or an increase of $0.269.
That price is about 50% higher than this time last year when it was trading around $1.80 per MMBtu.
Front-month natural gas futures (NG1) were $2.84 at that time, as traders anticipate increased demand for the commodity as a massive storm heads toward the northeastern United States.
Monday's outlook adds 18 heating degree days compared to Friday's outlook, according to Wood Mackenzie.
"The unseasonably cold weather is expected to arrive this weekend and stock around through next week… The polar blast could mark some of the coldest temperatures seen this winter in much of the U.S." Wood Mac analyst Mark Spangler said in a note to clients today.
And the price of natural gas may climb higher still, with more cold weather in store toward the middle of this month.
Some areas of the United States like Kansas, Alaska, Massachusetts, and Wisconsin, could see this week-or are already seeing--the coldest temperatures so far this winter. The increased demand could help to drawdown stubborn inventories.
At 2,881 Bcf of natural gas in underground storage, U.S. inventories are still well above the five-year average of 2,637 Bcf, and above last year's inventories at this time, of 2,803 Bcf, according to the Energy Information Administration.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More