On November 23, the natural gas spot price at the Henry Hub in Louisiana was $4.70 per million British thermal units (MMBtu), the highest price since a temporary spike in January 2018, and before that, the highest price since June 2014. The relatively sudden increase in prices exceeded the expectation of many market participants, based on the prices and volatility of futures and options contracts at the beginning of November. Prices have come down slightly in the past week, but they remain at a higher level than during much of the past four years.
Natural gas is the primary space heating fuel in almost half of all U.S. households, and colder temperatures increase the consumption of natural gas for heating purposes. Heating degree days (HDD) are a temperature-based proxy for heating demand, and more HDD indicate colder temperatures. In the U.S. Midwest and Northeast, where heating demand is often the greatest, data indicate that HDD for November were 17% to 28% more than the 10-year average, respectively.
As weather-related natural gas demand increased, relatively low levels of natural gas in storage likely contributed to price increases. Natural gas inventories ended October at the lowest level since 2005. On November 23, U.S. inventories of natural gas were less than 3.1 trillion cubic feet, or 19% lower than the previous five-year average.

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