Natural gas prices spiked Monday as a winter storm dumped snow on much of the West and below-average temperatures were forecast across the country.
Gas futures rose more than 10% before taming, trading near $7 per million British thermal units. That price is nearly twice what gas was trading a year ago, although it remains below the highs seen over the summer.
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var _bp = _bp||[]; _bp.push({ "div": "Brid_70855800", "obj": {"id":"27789","width":"16","height":"9","video":"1203496"} }); ","_id":"00000185-070b-d762-ab8f-bf1b7ec50000","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video EmbedSpot prices in California reached as high as $55 per MMBtu over the weekend, more closely reflecting prices Europe has faced all year long due to its supply crisis.
Updated forecasts by the National Oceanic and Atmospheric Administration show most of the country is expected to see below-average temperatures over the next few weeks.
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Juan Alvarado, senior director of energy analysis for the trade group American Gas Association, said new estimates from the International Energy Agency published Monday forecasting potential gas shortages in Europe next year were another possible contributing factor to price spikes, in addition to the weather.
“The storm is likely to also be partly at fault for futures trading as other regions of the country prepare for the storm and its aftermath by buying gas ahead of the storm,” Alvarado said.
The spike reflects the volatility markets and utility customers can expect through the winter.
Natural gas production has continued to rise to at or near record levels in recent months, and gas storage levels are consistent with the historical average, but demand is rising with the onset of cold temperatures, according to federal data.
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The Energy Information Administration reported the first net withdrawal from gas storage of the season for the week ending Nov. 18 amid the spread of colder temperatures.
The EIA expects the average U.S. household’s gas bills this winter to exceed last winter’s by some 28%.
