Cold weather exceeds expectations, US Natural Gas futures rarely surge over 20% during trading, is inflation cooling down again?

On Monday during the U.S. stock market, NYMEX natural gas futures for February contracts saw an intraday increase of up to 21%, reaching $4.094 per million British thermal units. This is the largest increase for this contract since it began trading in 2012. The most active futures prices climbed to their highest level in nearly a year. The surge in U.S. natural gas futures prices is due to colder weather forecasts for January, which have raised the demand outlook for heating and power generation fuels. The National Weather Service's latest 8-14 day forecast indicates a higher likelihood of colder weather in the eastern and midwestern United States compared to normal. This will contrast sharply with the relatively mild weather experienced in much of the country during the fall and early winter. Various models predict that in the second week of January, half of the eastern United States will experience cold weather. The peak of the cold weather is expected around January 12, and some models indicate that the low temperatures may last longer. If the cold wave materializes, U.S. natural gas demand is expected to reach an all-time high. Meanwhile, Texas and the Marcellus region may see some oil wells shut down due to frozen wellheads, further impacting supply. Additionally, liquefied natural gas exports require extra gas, meaning overall demand will continue to increase in the coming period. BOK Financial energy trader and analyst Dennis Kissler wrote in a report on Monday that the expectation of a sharp drop in temperatures has triggered a "buying frenzy" for natural gas. Stephen Roseme, managing partner at Bridgeton Research, which tracks trading activity, stated that funds using algorithmic trading strategies have also adjusted their risk positions from neutral to net long. There are also analyses suggesting that higher natural gas prices could have macroeconomic impacts, pushing up inflation rates, while the cold weather may suppress consumer spending in the U.S.