Natural gas markets flipped from complacency to outright panic this week as dramatic changes to late-January weather forecasts triggered one of the most aggressive front-month rallies on record. After trading near four-year lows just days earlier, the February contract surged more than $2 on the week as an extended, historically cold pattern set in across much of the U.S., with no clear end in sight. The longevity and intensity of the cold are now expected to drive potentially record storage withdrawals over the next several weeks, sharply tightening the supply-demand balance. At the same time, early signs of freeze-offs are already knocking several Bcf per day off production, amplifying the impact. The result has been a rapid repricing not just of February risk, but of the entire forward curve, as expectations for end-of-winter inventories and summer balances are reset.
