Amid reports of power outages and production freeze-offs resulting from an intense cold blast stretching down into the Gulf Coast over the holiday weekend, natural gas futures were sharply higher in early trading Tuesday. The March Nymex contract was trading at $3.095/MMBtu at around 8:50 a.m. ET, up 18.3 cents from Friday’s settlement.

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A result of “bitterly cold air” making its way into the Midcontinent and Deep South, “massive amounts of production” were offline as of early Tuesday, as were numerous gas-fired power plants, EBW Analytics Group analysts said in a note to clients. Liquefied natural gas operations and industrial consumption had also “taken major hits” as a result of the conditions, according to the firm.

The “extreme cold” has “brought chaos to the U.S. oil, gas and power markets,” the EBW analysts said. “Texas has been hardest hit. Permian Basin oil production reportedly has fallen 1 million b/d, with significant declines in other fields…More than 30 natural gas pipelines have declared force majeure and at least 7 Bcf/d of natural gas production has been shut in due to freeze-offs, gas processing plant shut-ins and pipeline outages.”

The conditions drove record prices in the spot market ahead of the Presidents Day holiday weekend, with NGI’s Spot Gas National Avg. soaring to an astronomical $61.960/MMBtu in Friday’s trading.

Along with the high cash prices and the production freeze-offs, NatGasWeather noted an increase in heating degree days from forecasts over the weekend break.

“There’s been a plethora of major energy issues impacting Texas” and the Electric Reliability Council of Texas territory “due to the current Arctic blast that’s driving record demand and leading to rolling blackouts, aided by much lighter wind generation due to iced up wind turbines,” the firm said. Given these factors trade “will be wild” over the next few days, “especially in cash markets.”

Looking at the forecast, Arctic air is expected to hold over the Midwest, central Lower 48 and Texas for several more days “before finally ejecting towards the East…However, there’s still a milder break setting up” over much of the country starting around next week through Feb. 28, NatGasWeather said. 

Still, the firm added that “this break isn’t quite as mild as what the data showed a few days ago,” and the American and European weather models both “tease another round of below temperatures arriving into the U.S. March 1-2, initially into the Rockies and Plains but potentially spreading eastward after.”

EBW analysts noted that prices for the March contract had “solidly broken through an important resistance point” at $3.05 as of early Tuesday but were “struggling to move past $3.10.” The extreme cold, combined with the prospect of the next Energy Information Administration storage report showing a withdrawal of more than 250 Bcf could open the door for a test of resistance at $3.20, according to the firm.

“By next Sunday, though, total demand is expected to fall 35-40 Bcf/d from recent peaks,” the EBW analysts said. “Further, the March contract is trading at a premium to summer and fall, which is not tenable. The odds favor, therefore, a decline in the March contract by next week.”

March crude oil futures were up 20 cents to $59.67/bbl at around 8:50 a.m. ET, while March RBOB gasoline was up about 6.4 cents to $1.7563/gal.