A colder winter will drive the average price of natural gas to $3.38 per million British thermal units (MMBtu) in January, the U.S. Energy Information Administration (EIA) forecasts.

The EIA’s newly released Short-Term Energy and Winter Fuels Outlook expects the average price of gas to soar from $1.92/MMBtu in September on rising domestic demand and increased demand for LNG exports, as well as reduced production. Even with inventories expected to reach a record 4 trillion cubic feet (Tcf) by the end of October, higher withdrawals than the five-year average will drag that total to 1.7 Tcf, 6% below the average for 2016-2020.

“Prices can be really volatile is the market is caught off-guard,” Ed Morse, global head of commodities research at Citi Research, said during an Oct. 7 webinar discussing the outlook. “We’ve had a very unusual year with natural gas. We had an extremely mild northern hemisphere winter last winter. We had inventory levels at the end of the heating season at abnormally high levels across the planet.”

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