The polar vortex impacting the U.S. has led to a significant rise in heating fuel prices, causing renewed volatility in the energy market. U.S. natural gas futures recently hit their highest level in nearly two years, while heating oil reached a peak not seen since last October.
The northern U.S. is experiencing one of the coldest Januarys in over a decade, surprising traders accustomed to mild winters. Historically, winter drives up heating fuel prices, but last winter was the warmest on record, according to the National Centers for Environmental Information.
Phil Flynn, an analyst at Price Futures Group, noted that despite increased production and higher-than-normal inventories, the market faces winter challenges unseen in years. Approximately 47% of U.S. households use natural gas for heating, and 40% use electricity, while some northeastern areas still rely on heating oil.
The polar vortex could disrupt supply, potentially driving natural gas prices up by over a dollar. The U.S. Energy Information Administration forecasts an 11% rise in natural gas prices and a 6% increase in electricity costs this year.
