U.S. natural gas prices surpassed $5 per million British units Tuesday, days after topping that mark for the first time since 2010, as cold weather kept demand for heating and electricity high.
Contracts for February delivery of natural gas closed at $5.03 per million Btu in Tuesday trading on the New York Mercantile Exchange, up 19 cents from the closing price on Monday.
The February contract has risen as high as $5.40 in after-hours electronic trading in recent days, according to data from CME Group, which owns the exchange.
The price spike is mostly seasonal and is widely expected to be temporary.
“It’s winter driven and as soon as the market is given a chace to correct that over the course of a seasonal cycle it will,” said James Sullivan, senior analyst for Alembic Global Advisors.
Price spike: Natural gas breaks $5 mark on winter demand
Power plants and heating furnaces consumed more natural gas as winter temperatures fell, and supplies in storage are down 20 percent from last year, according to the latest measure from the U.S. Energy Information Administration.
The 2.4 billion cubic feet of natural gas in storage is the lowest supply of the fuel at this time of year since 2005, prior to the shale boom, according to data from the Energy Information Administration.