U.S. natural gas futures surged to the highest level in more than a week after winter stockpiles of the furnace and power-plant fuel expanded less than expected, heightening concerns about adequate supplies going into the peak-demand season.
Gas prices have already more than doubled this year and the peak, winter demand season is still weeks away in major cities like Chicago that rely heavily on the fuel for residential heating. The futures pushed almost 7% higher Thursday after a government tally of crucial auxiliary supplies stored underground showed a weaker-than-expected increase with time running out to boost inventories.
Energy prices are soaring worldwide as the approach of winter in the northern hemisphere exposes widening supply deficits in gas and coal that have forced some manufacturers to idle factories. Post-pandemic economic rebounds may be in jeopardy in some of the world's biggest economies as the unprecedented pressures force governments and regulators to make hard choices about whether to triage energy deliveries to essential sectors.
In the U.S., gas futures for November delivery closed up 1% to $5.65 per million British thermal units on the New York Mercantile Exchange, after reaching $5.964 earlier in the session.
The widely watched U.S. gas inventory report on Thursday showed that supplies held in storage grew by 81 billion cubic feet last week, far less than the 93 billion median of estimates compiled by Bloomberg. Meanwhile, in a separate report this week, the Energy Information Administration warned that U.S. households this winter are facing the highest bills since 2007-08.
"This is disappointing for people who want low prices because the hope was that we could put together triple-digit injections to cool off prices, and that's not happening," said Phil Flynn, senior market analyst at Price Futures Group.
Flynn's reference to "triple-digit injections" means weekly storage gains of 100 billion or more; there have been only two of those all year.