Wholesale natural gas and propane prices in the US kept rising from late 2024 well into January and early February due to unseasonably cold weather. “Timing and magnitude of actual price increases were faster and greater than initially forecast,” the US Energy Information Administration (EIA) commented.
January’s cold weather caused a jump in natural gas consumption – both for heating and electric power generation – and resulted in near-record withdrawals of gas from storage. Similarly, U.S. propane inventories were drawn down fast from healthy levels at the start of the winter. U.S. propane exports are also at record highs which tends to elevate domestic propane prices.
“Weather outcomes are a key source of uncertainty in our forecasts,” EIA analysts noted, explaining that residential propane and heating oil expenditures tend to have wider ranges of uncertainty than fossil fuels. By comparison, natural gas and electricity prices tend to lag changes in wholesale prices because of the nature of utility regulation.
