Bloomberg reported that Europe is preparing to face the most severe cold spell of this winter, when temperatures are forecast to drop sharply this weekend due to the movement of low pressure areas.
Record low temperatures in many major cities. According to data from Weather Services International, the average temperature in London (UK), Paris (France) and Berlin (Germany) on January 3 and 4 will drop below 0 degrees Celsius, about 6 degrees Celsius lower than the 30-year average.
In the UK, the Met Office is forecasting snowfall, accompanied by strong winds and heavy rain. In Germany, the DWD meteorological agency has also issued a warning for frost and ice.
This severe cold is expected to spike heating demand, forcing countries to use gas reserves, which have fallen below 75%. This year's gas withdrawal from reserves has been faster than usual, raising supply concerns as the gas transit agreement between Ukraine and Russia expires today (December 31).
Natural gas prices in Europe are now approaching record highs in early December. The loss of Russian gas flows could make Europe more dependent on liquefied natural gas (LNG) from the United States. However, cold weather in the US is also pushing up domestic demand.
On the morning of December 30, US contract gas futures increased sharply as weather models continued to show that a strong cold front would sweep across most of the eastern part of the country in the coming days.
This Arctic cold air mass is forecast to last for a week in the eastern half of the US, with a high chance of snow and ice appearing in some places.
Traders reacted to the forecast of a significant increase in heating demand, as reflected in updated "heating degree days" indicators.
In the morning trading session of December 30, February gas futures skyrocketed to 12.3%, reaching 3.80 USD per million British thermal units (MMBtu).
Technical analysts said that prices have overcome the important resistance level of 3 USD in this year's heating season, marking a recovery from the bottom for many years after a sudden increase of nearly 10 USD in mid-2022.
BAMWX weather forecasting company informed customers that the Arctic cold spell, also known as the "extreme cyclone", will sweep the eastern half of the US in the second week of January or the middle of the month. "We are now starting to think about the possibility of a historic cold front," BAMWX warned.
With the forecast cold level, gas prices could continue to be under increasing pressure, posing a major challenge for US consumers and the energy market in the coming weeks.
