FX.co ★ US Natgas Prices Halt Historic Rally

U.S. natural gas futures experienced a more than 6% decline, settling at $3.37 per million British thermal units. This drop follows an extraordinary surge of approximately 117% over the previous five trading sessions as traders decided to capitalize on their gains against a backdrop of weather-induced supply disruptions. The United States continues to face severe freezing temperatures that have escalated both heating and power demand, thereby putting a significant strain on electricity grids. Recently, a severe winter storm incapacitated roughly 12% of U.S. natural gas production, resulting in limited supply to both power plants and residential areas. Consequently, the average natural gas output in the Lower 48 states has decreased to approximately 106.9 billion cubic feet per day in January, down from a record 109.7 billion cubic feet per day in December. Additionally, gas flows to U.S. LNG export facilities have plummeted to their lowest levels in a year. The PJM Interconnection has declared a level one emergency, mandating that all power plants be prepared to function at full capacity. Authorities have also permitted the diversion of power from large industrial consumers to safeguard residential areas and hospitals, underscoring that supply risks remain heightened in spite of the recent price decrease.