Natural gas futures rallied on Tuesday as a cold snap in the US Midwest and Northeast drove up demand for heating. Cash markets were mixed, however, with prices in the Midwest and Northeast falling while prices in the South and West rose.
The cold snap has caused a surge in demand for natural gas, which is used to heat homes and businesses across the US. According to the US Energy Information Administration, natural gas consumption for the week ending December 8 was up nearly 8% from the previous week.
At the same time, production of natural gas has been declining, which has helped to support prices. Total US natural gas production for the week ending December 8 was down 1.5% from the previous week.
In the cash markets, prices in the Midwest and Northeast fell as demand for natural gas to heat homes and businesses was offset by ample supply. Prices in the South and West, however, rose as colder temperatures drove up demand in those regions.
The cold snap has also had an impact on the Freeport Activity, a natural gas storage facility in Texas. The facility saw a significant increase in withdrawals of natural gas during the week ending December 8. Withdrawals from the facility totaled nearly 15 billion cubic feet, up from just over 11 billion cubic feet the previous week.
The increased demand for natural gas has helped to support prices in the futures market. Natural gas futures for January delivery rose nearly 2% to settle at $2.81 per million British thermal units on Tuesday.
Overall, the cold snap has given a boost to natural gas futures, while cash markets have been mixed. The Freeport Activity has seen an increase in withdrawals as demand for natural gas has increased in the US.