Investing.com -- The U.S. natural gas market is experiencing a surge of excitement not felt since 2014, with weather forecasts predicting January to be significantly colder than the 10-year average, according to a note from JP Morgan.
This cold snap is expected to result in nearly 1 trillion cubic feet (Tcf) of natural gas withdrawn from storage this month. J.P. Morgan analysts have noted that weather will continue to be a critical factor in shaping the market and influencing prices into the summer of 2025.
The current price for summer 2025 has risen above $3.60 per million British thermal units (MMBtu), which could lead to increased natural gas production and a shift from gas to coal usage, as seen in December within the PJM and MISO regions. These changes are anticipated to help storage levels rebound from projections of 3.7 Tcf at the end of October toward 3.9 Tcf.
Analysts from J.P. Morgan have urged market participants to pay close attention to weather forecasts and remain adaptable to market conditions. With the February futures contract price now above $3.90/MMBtu and the summer 2025 price climbing, there is a growing concern about the market’s supply and demand balance and the potential for even more gas-to-coal switching than currently projected.
The colder weather has also raised the possibility of production disruptions, particularly in the southern U.S. regions such as Texas, the Mid-Continent, and the Northeast. This could lead to adjustments in the end-October 2025 storage estimate, which has already been revised from nearly 4 Tcf to approximately 3.7 Tcf.
J.P. Morgan’s analysis highlights the importance of monitoring weather patterns, as a colder February could necessitate higher prices for summer 2025. The firm has decided to maintain its current price forecast average of $3.33/MMBtu for the second and third quarters of 2025, pending a clearer understanding of weather impacts and market dynamics.
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