Intercontinental Exchange (ICE) and CME Group each experienced a surge in natural gas trading volumes in January, with market volatility and the unusually cold weather that swept over much of the country last month the likely causes.

ICE’s January average daily volume (ADV) for North American, UK and European natural gas was 1.43 million contracts, a 9% increase compared with 1.31 million in January 2013, ICE said. Power trading on ICE was up even more significantly, jumping from an ADV of 512,000 contracts in January 2013 to 929,000 in January 2014.

New York Mercantile Exchange (Nymex) parent CME said ADV for all natural gas contracts trading on Nymex, including the benchmark Henry Hub Natural Gas futures contract, was 736,238 in January, a 30% increase compared to 564,791 in January 2013. It was the second consecutive month of strong growth in gas trading, with December 2013’s ADV of 655,121 contracts 40% more than the 468,186 reported in December 2012, CME said.

The higher trading volumes “are a pretty normal trading reaction to both the forecast for colder-than-normal temperatures and for the way that the price was moving itself,” according to Citi Futures Perspective analyst Tim Evans. “We moved up into price territory that we hadn’t seen for two years or so, and so there was a lot of reaction to that, both in the form of short-covering and fresh buying, and running for cover more generally.”

Whether similar volumes will continue into late winter and early spring may depend on where temperatures are headed, Evans told NGI.

“I think that the price has certainly come under considerable selling pressure — some of this is probably pure profit taking, some of it is probably people willing to make the assumption that winter can’t hurt us anymore, that all of the intense cold and all of the largest storage withdrawals are now in the past.

“The offsetting, still-bullish factor is that we still have at least some cold still in front of us; we still have a growing year-on-five-year storage deficit. I think there’s still some risk as we move toward the March contract expiration, or even into March and April, that there’s still going to be a lower than normal storage level and some renewed price risk.”

Nymex natural gas options ADV was 73% higher last month compared to January 2013, and natural gas options traded electronically set a single day volume record (75,778 lots) on Jan. 24. That record may have been the result of the launch of natural gas basis markets, CME said.

“Since the launch, we have seen active market making on the screen, with a diverse group of participants across several points in all four regions and trading activity in the prompt month, calendars and some long-dated activity,” said Gary Morsches, managing director of global energy.