Natural-gas prices rose Monday after weather forecasts showed a bout of cold temperatures that could spur heating demand for parts of the U.S. this week.
U.S. natural-gas futures finished Monday’s session at $4.060 per million British thermal units. That is up 8.8% from $3.731 per million BTUs at Friday’s close and the largest dollar gain since Nov. 26.
The Weather Prediction Center predicted heavy snow, freezing temperatures and strong winds in the northern and western parts of the country.
“The colder weather coming to the U.S. will be watched and we should see a substantial pick up in heating demand next week,” wrote BOK Financial BOKF 1.20% analysts in a note.
As the weather turns colder this week, Refinitiv is projecting average U.S. gas demand, including exports, to jump to 126.7 billion cubic feet a day, up from 110 billion.
Most investors have been betting on a decline in gas prices. The number of bets by hedge funds and other speculators that prices will decline continue to outnumber those on rising prices by a wide margin, according to recent Commodity Futures Trading Commission data.
Monday’s rise marks a break from the monthslong decline in natural-gas prices. An uptick in domestic gas production and an unseasonably warm fall and winter delayed heating season in much of the country, causing prices to come down.
Natural-gas prices extended declines last week after the U.S. Energy Information Administration storage report showed a weekly decline of 55 billion cubic feet. That fell short of the 57 billion forecast from analysts surveyed by The Wall Street Journal, helping push gas storage into a small surplus.
Prices skyrocketed earlier in the year, however, surpassing $6 per MMBtu in October.
It isn’t unusual for natural-gas prices to bounce around a lot this time of year, when traders must triangulate winter weather forecasts with production reports and inventory data. Much of the world is on watch for heating-fuel shortages this winter after a lot of gas was burned for air-conditioning during some of the hottest summer weather ever recorded in the Northern Hemisphere.
Other factors have put pressure on gas prices. A lack of coal supplies has caused generators to conserve coal stockpiles and boost natural-gas-fired generation, said Bank of America analysts in a recent note.
Write to Sebastian Pellejero at sebastian.pellejero@wsj.com
Corrections & Amplifications
Most investors have been betting on a decline in gas prices. A previous version of this article incorrectly said most investors have not been betting on a decline in gas prices. (Corrected on Dec. 27.)
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Appeared in the December 28, 2021, print edition as ‘Natural- Gas Prices Rise on Colder Forecasts.’
