Natural Gas Prices Are on a Tear

Winter hasn't even begun and natural gas is already spiking. Prices jumped sharply last week, as fundamental concerns about an arctic blast and future winter weather squeezed shorts. They are likely to rise further through the end of the year and into 2018. The cold weather has been accompanied by a relative deficit of natural gas inventory. This surge in perceived demand along with tight supply triggered a technical breakout of prices to the upside.

For most of 2017, price movements have been relatively rangebound between a low of $2.56 in February, and a high of only $3.42 in May. This relatively narrow and somewhat low set of prices is a departure from historical levels, which have often had multi-dollar price swings in a matter of months. After exceptionally low average prices for 2015 and 2016, average annual prices are likely to rise both this year and next.