Natural gas in the U.S. jumped by 10% due to a bad weather forecast

Decreasing production and expectations for higher gas demand have caused natural gas futures in the U.S. to rise. On Wednesday, they jumped about 10%.

Analysts at energy consulting firm Gelber & Associates said higher prices for now, as overnight runs of major weather forecast models identified the possible appearance of widespread below-average temperatures beginning around mid-November.

Previously, there was said about the decrease in demand during the next two weeks, but prices have risen sharply. However, the weather is expected to remain mild until at least till mid-November. Utilities normally end their gas pumping season on October 31. Because of the weather forecast, they have the opportunity to continue adding gas to storage for a few more weeks.

A pipeline explosion on June 8 caused an unexpected shutdown of the Freeport LNG export plant with 2.1 billion cubic feet per day (bcfd) capacity. The company expects the plant to return to at least partial operation in early to mid-November. According to Refinitiv, at least four ships are already lined up to receive LNG at Freeport.

U.S. gas futures are significantly lower than world prices. The country is the largest generator in the world, producing gas in excessive quantities for domestic consumption. At the same time, capacity limitations and shutdowns at Freeport have not allowed the country to export more LNG.

Refinitiv forecasts point to an increase in average U.S. gas demand from 98.1 Bcf/d this week to 100.0 Bcf/d next week, including exports. This will come with the coming of seasonally cooler weather.