Cold-weather forecasts throughout the U.S. are extending a rally in natural-gas costs, the latest instance of shifting temperatures wrong-footing traders in the volatile commodity market.
Natural-gas futures surged 3.9% to $2.821 a million British thermal units on the New York Mercantile Exchange Monday, bringing their rally from a multiyear low hit three months ago to around 36%. Costs are at their highest level since March.
Cold weather tends to keep demand and prices afloat as more people activate their heaters and consume more power. Forecasts over the weekend and Monday called for cooler-than-anticipated temperatures in the coming days and weeks, offering the newest boost for natural gas.
While a sustained rally in natural-gas costs may significantly push up heating prices for shoppers, cutting into available revenue and threatening economic growth, prices are still down for the year and well below where they were around this time in 2018.
A spike pushed up prices near $5 in November 2018, when analysts had been additionally calling for supply deficits. Record U.S. production has zapped bullish view from the natural-gas market this year, although, pushing up inventories and fueling bets on costs continuing to drop.
Hedge funds and different speculative investors have already begun turning barely less bearish. They pushed down net bets on lower natural gas costs through the week ended Oct. 29, Commodity Futures Trading Commission data present, although bearish bets still far exceed bullish ones.
The current price swell is growing attention on weekly natural-gas stock data, with U.S. stockpiles nonetheless 18% above their levels from the same interval in 2018 and above their five-year average levels.