Bundle Up: Natural Gas Prices Surge Anew — WSJ

By Ryan Dezember

Natural gas futures shot 11% higher on fresh forecasts calling for colder temperatures than earlier weather reports had predicted.

January gas futures added 44.3 cents per million British thermal units Tuesday to settle at $4.408. The daily gain reclaimed a big chunk of this month's unseasonal swoon and put prices for the heating and power-generation fuel back roughly to where they started the heating season at the end of October.

Gas prices took off in November and hit their highest levels since fuel markets spiked following Russia's 2022 invasion of Ukraine. In early December, forecasts for warmer-than-normal temperatures sparked a selloff.

The latest forecasts, however, call for a return to seasonally chilly temperatures in enough places to change the math for energy traders. This time of year they gauge demand by adding up the number of heating degree days, a population-weighted measure of temperatures below 65 degrees Fahrenheit.

One weather model that traders watch has added more than 50 heating degree days to its outlook in recent days, though another model predicts warmer weather than that, according to analysts at NatGasWeather.com.

"For now, the markets are believing the colder (model) and are up sharply as a result," the trading firm said.

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