U.S. gas prices rise by 5% due to a cold snap forecast

On Tuesday, January 17, U.S. natural gas futures rose by 5% from their 18-month low. This increase was driven by a few reasons. First, gas began flowing to the Freeport LNG export plant, one of the largest LNG producers in the U.S., which was previously shut down due to an accident. Second, the weather forecast promises a cold snap in the near future, thereby raising heating demand.

Refinitiv data demonstrate that gas from pipelines began flowing to Freeport LNG over the past weekend. And although federal regulators have not yet received a request to restart the plant, flowing gas might indicate that it is gradually recovering.

According to official representatives of Freeport LNG, the plant is preparing to restart in the second half of January. However, many analysts believe that the restart will happen later — in February or even in the second quarter of the year. Such a delay might be caused by the significant amount of work needed for meeting the federal regulators’ requirements.

The rise in gas prices earlier this week was the biggest daily percentage increase since last week. The prices came out of the technically oversold zone for the first time in five days.