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The US is bracing for a surge in natural gas demand as freezing weather and snowstorms threaten to cause widespread power outages, reported Reuters, citing energy analysts and reliability coordinators.
The current conditions could lead to the highest levels of natural gas demand this winter. The increased demand coincides with potential supply drops due to “freeze-offs,” which occur when oil and gas wells and pipes freeze.
Natural gas is a critical energy source in the US, powering approximately 43% of the nation’s electricity generation and heating around 45% of homes.
The Energy Information Administration (EIA) indicates that the expected jump in demand, coupled with a possible decline in supply, may result in higher natural gas prices in the coming week.
The combination of high demand and supply disruptions in January 2024 pushed spot gas prices at the US Henry Hub benchmark in Louisiana to more than $13 per million British thermal units (MBtu). Currently, next-day prices at the Henry Hub are around $3.65/MBtu, the highest levels since January 2024.
Additionally, the EIA projects that OPEC+ oil production cuts will reduce global oil inventories by approximately 700,000 barrels per day (bpd) in the first quarter of 2025 (Q1 2025).
