Natural Gas Breaks $5 on Coldest Forecast in Decades; Crude Drifts Lower as Supply Disruptions Fade

Crude retreats as risk to supply disruptions soften

• The WTI prompt-month contract rose $1.01 to $59.61/Bbl on Thursday morning (7:45 AM CT)
• Loadings at the Kazakh CPC terminal are ramping up following weeks of export constraints (Bloomberg)
• • 15 tankers have completed loadings of CPC blend this month, roughly 690 MBbl/d
  • 70% of the volume was loaded over the past week as the backlog at the terminal eases
• The CPC is also nearing restoration on one of its three moorings, potentially lifting shipments and easing tight near-term supplies in Europe
• The American Petroleum Institute reported US crude stockpiles rose by 3 MMBbls last week, with official government data due later Thursday

Near-term US crude production to remain near 2025 record (EIA)

• In their latest Short-Term Energy Outlook, the EIA forecast US crude production in 2026 will remain near the record 13.6 MMBbl/d 2025 level
• 2027 US production is expected to fall by 2% to 13.3 MMBBl/d, marking the first annual decline in US production since 2021

Natural gas extends gains, with February trading above $5/MMbtu

• February Henry Hub is trading higher by 45c to $5.33/MMbtu, while the Summer ’26 seasonal strip is up 12c and next winter is also up 12c (8:15 AM)
• The EIA will release its weekly natural gas storage report today, with the Bloomberg survey showing a median expectation of a -98 Bcf withdrawal

Weather forecasts shift colder again (CWG)

• Overnight forecast changes added more demand to the near-term outlook for gas, with the European Ensemble model adding 1.3 HDDs over the two-week period, although losing a slight amount of demand this weekend
• The January 22 – February 5 period is currently forecast to be the coldest since 1985
• Production freeze-offs remain a large risk this weekend, with temperatures in the Permian Basin, Haynesville, and Northeast forecasted to drop low enough to endanger output for a few days
• Weather models are trending toward another cold front around the middle to end of next week, adding further demand to the two-week outlook

Winter storm to test ERCOT grid

• The Texas grid operator has issued a weather watch for Saturday through Tuesday, with very high electrical demand expected
• Electrical load is expected to rise to a seasonal high of 72 GW
• Currently, renewables are forecast to be relatively weak this weekend, which should result in higher utilization of gas and coal plants