Cold has traders bidding

But even when overall supplies are abundant, weather and geography can send natural gas prices on wide swings.

In the mild winter of 2012, benchmark prices slid to near $1.80.

Earlier this year, by contrast, as the now-infamous polar vortex sent temperatures plunging, markets scrambled to keep up with winter demand. At the Algonquin hub near Boston, with strong winter demand and without sufficient infrastructure links to gas supplies, spot-market prices spiked to near $78 when the Henry Hub price was around $8.

Gas suppliers drew their inventories down to decade-long lows – about 1 trillion cubic feet below average winter levels. Those inventories are usually built up in the warmer months and drawn down in the winter.

Since then, suppliers have been working to rebuild inventories.

As the nation experienced its first major cold snap of the fall in recent days, traders bid up the price again, Hammond said.

“People are creatures of our most recent experience,” he said.

At the same time, he added, traders know that falling oil prices are expected to cause many oil production operators to cut back on drilling. If that happens, companies focusing on oil will also be pumping less associated gas – the natural gas that can be produced along with crude.

Still, Hammond said, a pullback or slowing growth in associated gas production wouldn’t have much impact on prices until sometime next year. He attributed 90 percent of the recent rally in prices to the colder weather. The price for natural gas isn’t expected to move much, he said.

But while analyst models don’t have natural gas prices leaving the single digits anytime soon, there is a bit of a range for prices in the coming years.

Michelle Foss, chief energy economist at UT’s Center for Energy Economics, said that a cutback in associated gas production could join with an expected increase in demand in the coming years and push the price of natural gas north of $5.