Natural Gas Market Note | 01.26.2026
February 2026 futures hit new all-time high as extreme volatility continues.
Prompt-month natural gas futures continued the historic rally on Monday, with February spiking above $7.40 per MMBtu to set a new all-time contract high before easing to settle about 60 cents off the intraday peak — still up more than $1.52, or nearly 30%, from Friday’s close. February gapped higher at the Sunday evening open and went on to trade in a daily range of more than $1.70 per MMBtu, whipping back and forth throughout the session. The market is searching for equilibrium amid extreme weather conditions that are driving spot pricing well above $100 per MMBtu at key delivery hubs in the East and above $50 across the Midwest and Midcontinent.
Beyond winter, the forward curve continues to post more measured gains. The Summer 2026 strip added another 13 cents, extending the recent rally that has reset pricing back to mid-December levels near $3.90 per MMBtu.
With the market still near the beginning of this extended cold weather event, significant uncertainty remains for the week ahead. According to current estimates, domestic production has already been reduced by nearly 10 Bcf per day relative to recent highs. If these losses deepen in the coming days, the resulting supply tightness would further strain the physical market and increase reliance on storage inventories to meet extreme demand conditions.
Elsewhere in the supply-and-demand balance, estimated residential and commercial demand surged on Monday to a new seasonal high above 69 Bcf, while power generators consumed an estimated 50 Bcf — a level that rivals the hottest days of last summer. In total, domestic demand climbed to nearly 180 Bcf, according to Monday’s estimate. This ranks among the highest single-day demand levels on record, though it still falls short of last January’s all-time high just below 200 Bcf. Demand is expected to remain extremely elevated until temperatures begin to moderate early next week.
With reduced supply and near-record demand, elevated volatility is no surprise — particularly with nearly another full week of extreme cold still ahead. For each of the next five days, population-weighted heating degree days (HDDs) are forecast to remain above 37, a threshold typically reached only a handful of times each winter. The intensity and persistence of the cold are having a profound impact on market fundamentals and should continue to support extreme physical pricing through the remainder of the week.
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