US natural gas prices rise 18% as models show a brutal January cold snap

The polar vortex is pushing south and east in what could be a record-breaking cold snap in parts of the United States.

Several models are converging around cold weather in the eastern half of the US in the second week of January. The peak of the cold looks to be around January 12 but some of the modelling has an extended period of cold. If it unfolds, there will surely be record US natural gas demand and that could also be combined with well shut-ins due to freeze offs in Texas and the Marcellus.

Needless to say, there could be macro impacts as well. Higher natural gas prices feed into headline inflation while I would also expect the cold to dampen US consumer spending.

Henry hub natural gas prices on the February contract were last up 59-cents to $3.98.

This article was written by Adam Button at www.forexlive.com.