Natural gas trades lower as peak winter fades
The March Henry Hub contract lost 20c this week to settle at $3.05/MMBtu, bringing total losses over the past two weeks to -38c. The contract briefly fell below $3/MMBtu but finished the week above this level. The Summer ’26 seasonal strip lost 9c this week, while Winter ‘26/’27 fell 6c. The primary driver of the selling pressure across the curve was continued weakness in the near-term demand outlook. Meanwhile, Golden Pass LNG began receiving material volumes of feedgas and public companies began reporting Q4 earnings.
With the March Henry Hub contract expiring next week, and the month of February more than halfway over, market participants are turning their focus towards the shoulder season and upcoming summer. There should be a relatively strong shot of demand next week as temperatures across the Lower-48 cool off but will largely be offset by the bearish weather seen so far this month. Beyond next week, temperatures look to remain near the ten-year average.
After several years of delays, Golden Pass LNG has begun receiving material volumes of feedgas. Inflows to the plant have jumped from almost nothing to about 300 MMcf/d. Train 1 should be ramping up currently with the first cargo expected to ship in March. Over the next several weeks, Train 1 could reach as high as 790 MMcf/d. Trains 2 and 3 are scheduled to enter service this fall and early next year.
Public gas producers have started reporting earnings and providing updated guidance for 2026. EQT is keeping production at maintenance levels of around 6.5 Bcf/d in 2026, while running a lean drilling program of 2-3 horizontal rigs. EQT said they view 2026 as a strategic year to position for strong in-basin demand growth in 2027-2028. Expand Energy said they anticipate production averaging 7.5 Bcf/d in 2026, compared to an average of 7.18 Bcf/d in 2025 and 7.4 Bcf/d in Q4. The company plans to operate 11-12 rigs and will prioritize debt reduction.
Natural Gas Factors
Price Trend. (Bearish, Priced In) The March Henry Hub contract has trended lower over the last few weeks as the near-term demand outlook turned less bullish. The contract fell below $3/MMbtu this week, down about $1.50 from the highs seen in late January.
Winter S&D. (Bullish, Surprise)
Storage Level. (Bearish, Priced In) The storage level is a bearish priced-in factor due to the high levels of gas in inventories relative to the five-year average. According to the latest EIA weekly natural gas inventory report, Lower-48 storage is now at a deficit of -123 Bcf to the five-year average and 59 Bcf lower than last year.
Associated Gas Production.(Bearish, Priced In) Growth in associated gas production will be much slower than has beeen seen over the past few years, at least until the second half of 2026. Pipeline capacity out of the Permian Basin will begin to grow again next year, likely filling relatively quickly. These new Permian pipes should enter servicce around the same time as projects which will reroute gas around Houston, towards the border of Louisiana.
LNG Outages. (Bearish, Surprise) Feed-gas levels are at their near max capacity, and if there's any unplanned maintenance event or an outage, it may act as a surprise bearish factor for natural gas prices.
Slow Supply Response (Haynesville). (Bullish, Surprise) If production remains near where it is currently and does not grow into winter, this would be a bullish factor for gas prices. As production growth in the Permian and Northeast should be relatively constrained by pipeline capacity until the second half of 2026, the Haynesville will likely be the primary engine of production growth in the near-term. After being flat through most of 2025, Haynesville production and drilling activity has begun to increase this summer. Production is now up about 1.5 Bcf/d from the start of the year, but remains down from levels seen two years ago.
LNG Schedule. (Bullish, Mostly Priced In) With a significant amount of new LNG feedgas demand coming this year and the next few years, if these facilities startup sooner than anticipated it should be a bullish factor for gas prices. One example of this occuring is the recent startup of Plaquemines LNG, which saw feedgas levels reach more than 1 Bcf/d much sooner than anticipated.
Winter Weather. (Neutral, Surprise) While the first half of December came in significantly colder than average, the second half of the month is forecast to be warmer than average. January was the reverse, with the first half being quite mild but the second half being one of the coldestof the past several years. Following winter storm Fern in late January, temperatures turned far milder, with February being warmer than the ten-year average.
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