Natural gas prices in the US surged on Thursday, driven by persistently cold weather and opposition to reported plans by the European Union to impose price caps.
Earlier, gas prices had declined following a report by the Financial Times suggesting that the EU is considering temporary measures to cap gas prices, which have recently hit record highs compared to US rates. The European Commission is expected to unveil a package of measures on February 26 aimed at enhancing industrial competitiveness and reducing energy costs. However, European gas and energy trading industries strongly oppose the move, warning that such interventions could disrupt market stability and supply security.
Winter conditions remain a key factor in rising prices, with Arctic temperatures gripping northern Europe and parts of the US. Weather forecasts indicate that these cold conditions will persist through late February, maintaining strong demand for natural gas.
As a result, UBS has raised its gas price forecast for 2025 to $3.61 per MMBtu, up from $3.35 per MMBtu, citing three main factors:
- Sustained pricing strength due to colder-than-expected winter temperatures.
- Faster-than-anticipated drawdowns in gas storage to meet demand.
- Continued discipline by exploration and production (E&P) firms, as the industry has not shown significant signs of ramping up supply.
For 2026, UBS maintains its price forecast at $3.75 per MMBtu, highlighting the influence of increasing LNG exports and rising demand from power generation.
As global energy markets remain volatile, traders and industry players will closely watch developments in both weather conditions and EU policy decisions.
