The Arctic blast that froze much of the country last month cut deeply into natural gas stockpiles, averting a springtime fuel glut and setting the stage for higher prices later this year.
U.S. gas-storage caverns were brimming after months of heating season had passed with relatively little need for heat. The oversupply was erased by a winter storm that froze gas wells shut, wreaked havoc on Texas utilities and made the fuel a precious commodity in swaths of the country where it is normally abundant.
Prices jumped to records in some spot markets. Futures rose to their highest point since late October. Though the climb was short lived, gas producers and analysts say that enough gas was burned during the cold snap to likely keep prices from crashing when furnaces are shut off in spring.
Gas buyers, such as utilities, dug into inventories for the second-largest weekly withdrawal on record during the week that ended Feb. 19, when the worst of the weather hit. That brought the volume of gas in storage from well above normal for this time of year to below the five-year average. On Thursday, the Energy Information Administration reported a much smaller draw that missed traders’ expectations for demand last week.
Natural gas futures for April delivery traded down 2.2% to $2.75 per million British thermal units, and have fallen 15% from the February high. Yet prices remain up about 50% from a year ago, when an unusually warm winter around the world and fears that a new coronavirus would disrupt economic activity pushed prices to their lowest level in years.