Natural gas futures jumped more than 8 percent Tuesday, driven well above the key level of $5 per million BTUs on supply concerns and short-covering.
The move higher comes on the back of the unusual cold that has gripped much of the United States and amid a string of winter storms that have dumped as much as 10 inches of fresh snow in some parts of the Northeast this week. Natural gas futures settled at $5.317 per million BTUs on the Nymex.
"Forecasts for well-below normal temperatures and expectations of elevated heating demands in the next 10 days" have provided a boost to the market, Addison Armstrong, senior director of market research at Tradition Energy, wrote in a note this morning.
Because the cold weather is directly affecting supply, traders are watching weekly data carefully to make directional trades. Many believe that natural gas inventories will fall over the coming weeks, tightening supply in the face of increased demand. The next inventory report is 10:30 a.m. ET on Thursday.
"Gas prices, after sliding 15 percent from last week's four-year high above $5.50, are pushing back above $5.00 on expectations that end-of-withdrawal season inventory will fall to the lowest level in a decade," Armstrong wrote. "The potential that more than 700 [billion cubic feet] will be pulled from storage in the next couple of weeks has helped boost the market."
(Watch: Long-term bullish on nat gas: Pro)
Still, higher natural gas prices might not necessarily be a long-term trend. Warmer weather would quickly send prices lower, according to Armstrong.
He cautioned that "milder weather forecasts for the second half of February and near-record production levels of gas should provide resistance to rising gas prices."
—By CNBC's Jackie DeAngelis. Follow her on Twitter