Natural Gas Market Note | 01.27.2026
Futures end the day mixed after another day of extremely volatile trade.
Natural gas futures ended Tuesday mixed, with the February 2026 contract finishing higher, March lower, and the rest of the curve little changed. It was another volatile trading session, with February swinging in a wide range between $5.77 and $7.31 per MMBtu. Volatility intensified late in the day ahead of settlement, as the front of the curve traded in an 86-cent range in just the five minutes between 2:20 and 2:25 p.m. Eastern Time. In after-hours trading, the prompt-month contract eased further from the day’s highs, slipping back below $6.50 per MMBtu less than an hour after settlement.
Front-month volatility was exacerbated by thin trading conditions on the second-to-last day of trading for the February NYMEX contract. Tomorrow’s price action will be interesting, to say the least, as remaining open positions look to square ahead of expiration.
The market continued to assess the lasting impact of the extended bout of extreme cold. Production volumes remain depressed, even as output begins to recover across the Midcontinent and South Central regions. Estimated demand today slipped marginally from yesterday’s peak, but consumption remained at levels typically observed only during the coldest days of winter.
In addition to recent strength in NYMEX, February basis futures have also posted dramatic gains in recent days. According to recent indications, basis premiums across the East surged to nearly $15 per MMBtu on a regional average, with individual delivery hubs ranging from $7.50 to more than $30 per MMBtu. The Midwest also saw a significant shift, with key hubs flipping from a discount to NYMEX as recently as last week to an average premium of more than $0.80 per MMBtu.
These increases come as physical markets brace for a cold start to February and the risk that another major weather event could upend the market again next month.
Recent forecast updates trended colder for the upcoming weekend. While temperature patterns are expected to revert closer to normal by early next week, models are increasingly signaling the risk of another return to extreme temperatures near the end of the 14-day period.
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