A chimney from the Linden Cogeneration Plant is seen in Linden, New Jersey.
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Natural gas futures prices surged Monday, hitting a new 52-week high following reports of a colder-than-usual temperature outlook for January.
Natural gas February futures rose nearly 19% during the session after an updated outlook by The Weather Co. and Atmospheric G2 released Sunday showed that the temperature forecast for next month is expected to be colder than average in the East, specifically from Florida to Maine as well as certain parts of the Great Lakes.
The West, however, is expected to see temperatures come in milder than average, according to the report. Notably, the “Four Corners” region – the area of the United States that consists of the southwestern corner of Colorado, southeastern corner of Utah, northeastern corner of Arizona and northwestern corner of New Mexico – is expected to be the most above average.
The report also said that colder temperatures in the East could hit a peak by mid-month, likely being “much farther below average” when compared with the entire month’s forecast for the eastern U.S. That said, it’s still unclear how temperatures will take hold in January’s second half.
In a separate report, AccuWeather meteorologists said that the colder air could set up a “stormy pattern,” with areas seeing “substantial snow and ice” for a significant portion of the month’s first half. They added that the drop will begin in the middle and latter part of next week.
John Kilduff of Again Capital said Monday on CNBC’s “Squawk on the Street” that natural gas “freeze offs” could take place, meaning disruptions in natural gas production flows.
“We are talking [about] bone-chilling, polar-vortex weather, which has caused this spike in natural gas this morning,” the firm’s founding partner said.
Earlier in the session, February futures prices advanced as much as 20% and hit a high of $4.201 per thousand cubic feet. That marks its highest level since Jan. 4, 2023, when prices traded as high as $4.219 per thousand cubic feet.
The February futures move comes as natural gas – which is used for home heating – has seen major gains as of late. Prices of the commodity have jumped nearly 9% in the past week and about 58% this year.
Meanwhile, Brent crude futures rose 33 cents to $74.50 a barrel, while U.S. West Texas Intermediate crude gained 92 cents to $71.52 a barrel.