US winter storm derails Henry Hub's recent bearish turn

The fierce, impending US winter storm is reshaping the outlook for 2026 natural gas pricing which, until the current week, had been trending increasingly bearish.

Since markets emerged from the recent holiday weekend, forecasts have materialized calling for days of sub-freezing temperatures across much of the Central and Eastern US, as well as a corresponding surge in gas demand for heating.

Forward prices have soared in line with the forecasts, with the Platts M2MS 2026 Henry Hub forward strip rising to $3.90/MMBtu as of Jan. 21, 21% higher than where the strip settled on Jan. 16. Platts is part of S&P Global Energy.

The latest forecasts indicate the wave of cold temperatures to endure through the end of January and into February, Gary Cunningham, director of market research with Tradition Energy, said in a Jan. 22 commentary.

"The gas demand projections over the next ten days alone have shifted our outlook for storage levels for both the end of the current winter and the start of winter 2026/27 with both being pulled lower by several hundred Bcf," Cunningham said. "That is a big driver of why the impacts of the cold on prices is extending well beyond the near term."

Contracts at the front of the curve have seen the most dramatic swings. Prompt February NYMEX gas futures gained $1.94, or about 61%, over the last several days. March futures have gained 87 cents since Jan. 16.

NYMEX futures were trending significantly higher again on Jan. 22 until about midday, when a rally that had pushed the February contract up as high as $5.65/MMBtu began to subside, intraday data from CME Group showed.

February futures closed Jan. 22 at $5.04/MMBtu, Platts data showed.

Market volatility

A NYMEX bull market "appeared well on its way" in early December as prices exceeded $5/MMBtu, Scotiabank analysts said in a note to clients on Jan. 21.

"However concerns over high US natural gas production levels, warmer-than-expected late December and early January temperatures, volatile global natural gas prices, and sluggish power generation demand have driven the 2026 NYMEX strip down by nearly US$1/MMBtu over the last six weeks," the analysts said.

Before the latest rally, forward gas prices had over the last month been trending lower on strong gas production, softening seasonal heating and power demand and some smaller-than-average storage withdrawals.

US gas-fired heating demand fell off in the latter half of December, averaging about 38.7 Bcf/d as temperatures moderated.

Heating demand rose modestly on average during the first few weeks of January, but it is now on track to skyrocket through the end of the month. As temperatures drop over the next two weeks, S&P Global Energy CERA predicts residential-commercial gas demand will peak at more than 66 Bcf and average about 59 Bcf/d, well above the five-year average.

The price rally reflects a market "concentrating on what's happening today, not long term," Bob Yawger, an executive director with Mizuho, said Jan. 22.

"They're worried about the storm, the corresponding pile of snow that supersizes everybody's thermostat, the possibility of freezing and the possibility of blackouts in areas such as North Texas," Yawger said. "So those four kinds of things are what are usually, or oftentimes, spike these kind of rallies."