US natgas Futures Soar 89% in Five Days as Freezing Wells Cut Output to Two-Year Low

U.S. Natural Gas Futures rose by an unprecedented 89% in a period of?five days, reaching a three-year-high on Monday. This was after a weekend Arctic blast froze oil and gas wells. The result? A two-year-low gas production on Sunday.

The front-month gas contracts for February delivery at the New York Mercantile Exchange rose by 64.3 cents or 12.2% to $5.918 for a million British thermal units. This is the highest price since December 2022.

Financial firm LSEG reported that average gas production?in Lower 48 states fell to 106.9 bcfd so far in January. This is down from a record monthly high?of 109.7 bcfd -in December.

According to LSEG data, the daily output is expected to increase to 95.5 bcfd from a low of 92.6 bcfd, which was recorded on Sunday, mainly due to frozen wells in Texas, Louisiana and other states. This compares to a recent peak of 110.0 Bcfd and an all-time daily high of 111.2 Bcfd, both on December 21.

This means that output fell by 17.4 bcfd between January 13-25. According to LSEG, in past winters freezing wells - also known as "freeze-offs" in the energy industry - have slashed?gas?production by huge amounts. For example, the loss of 17.2 bcfd between January 8-16 in 2024; 15.8 bcfd between December 20-24, 2022; and 20.4 bcfd in February 8-17, 2021. (Reporting and editing by Kirsten Doovan; Scott DiSavino)

(source: Reuters)