Natural gas futures in the U.S. and Europe rose this week as cold weather boosted demand for the fuel, Bloomberg reported.
U.S. forward contracts hit their highest level since 2022 and are on track for a weekly gain of more than 70%, the biggest such advance since 1990. In Europe, natural gas futures fell on Thursday after rising about 40% this year.
Americans are being hit by severe winter storms that could bring unusually low temperatures to two-thirds of the country and disrupt gas production facilities in the South if water freezes in pipelines. Consumption is expected to rise, which could reduce inventories, according to Agerpres.
While the price hike is a boon for U.S. gas producers, consumers are struggling with high energy bills, which are a problem for governments around the world.
Europe is also bracing for another bout of cold weather in the coming days, as it relies on liquefied natural gas (LNG) from the United States. Europe will begin phasing out pipeline gas and Russian LNG this year. Stockpiles are unusually low after high summer temperatures and repeated frosts this winter.
“What is happening now is a bidding war between the TTF and Henry Hub, each fighting to keep gas in its market,” said a note from EnergyScan, owned by Engie SA, referring to the TTF gas hub in Amsterdam, where European benchmark prices are set, and the U.S. hub. The continent is realizing that efforts to attract LNG carriers “are not just about Asia, but also about the United States.”
In Asia, benchmark prices also hit their highest levels since November this week, traders said, as cooler weather boosted demand. While the region has ample reserves, unlike Europe, a prolonged cold snap could increase global competition for the fuel.
The rally in global gas markets comes after a period of relative calm, with new LNG projects set to come on stream in 2026 and beyond.
SEB’s Ore Hvalbye explained that gas prices are driven more by weather than by any structural shock or change in long-term fundamentals.
The expert added: “Gas has become a global and flexible commodity, and the traditional European season is less important. This means that when the weather or global flows change, price changes can be faster and more extensive, which is exactly what is happening now.”
Estimates from S&P Global Energy, Kpler and Rystad Energy predict that at least 35 million tonnes of new LNG production capacity will come on stream this year, mainly from the US and Qatar. This could increase global LNG supply by up to 10% compared to the previous year, with Kpler, Rystad, ICIS and Rabobank forecasting supply in 2026 to be between 460 million and 484 million tonnes.