Natural Gas Market Note | 01.20.2026
Weekend forecast changes send natural gas futures soaring higher.
Natural gas futures rallied sharply coming out of the long weekend, sparked by major changes to near-term temperature outlooks that materially alter demand expectations for the remainder of January. The February 2026 contract finished $0.80 higher than Friday’s settlement, ending the day above $3.90 per MMBtu after trading as low as $3.00 late last week. For historical context, this marks the largest daily increase for prompt-month natural gas since September 2022 on an absolute basis and the largest daily percentage gain since 2009.
Gains were not quite as steep beyond the front of the forward curve, but Summer 2026 still added nearly 40 cents on the day, while Winter 2026-27 posted a 22-cent gain. Today’s price action wiped out most of the past month’s losses across the curve.
Weekend forecast changes led to an expected increase of more than 200 Bcf in weather-related natural gas demand compared to expectations at the end of last week. With the coldest weather expected to begin this Friday and stretching into early next week, the brunt of the storage impact will be recorded in the report covering the week ending January 30. Early projections show the potential for a historic withdrawal, potentially far exceeding 300 Bcf. For context, there are only four weeks on record in which net withdrawals exceeded the 300-Bcf threshold, including the largest draw ever of 359 Bcf for the week ended January 5, 2018. Last winter saw a maximum weekly withdrawal of 321 Bcf for the week ended January 24, 2025.
The price response in the futures market indicates a dramatic shift from last week’s complacency around balance-of-season risk to real concern about the potential impact on the storage situation. Prior to the recent forecast change, inventories appeared on track to round out the winter well above 2 Tcf at a healthy surplus. Now, that threshold is looking more unrealistic and scenarios are back in play that leave stocks at a deficit heading into the summer.
In any case, we expect the coming 10-14 days to bring increased volatility in spot energy pricing amid possible pipeline constraints. We encourage end users to remain vigilant and strategically reduce exposure to spot markets where possible.
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