Natural Gas News: EIA Report & 10-15 Day Forecast Decide Market This Week

Natural Gas Soars 20% as Arctic Blast Exposes Supply Vulnerability

The nearby February contract surged to a 3-year high this week before expiring, with March Nymex taking over and settling Friday at $4.354, up 20.6% on the week. This wasn’t just a weather rally. The Arctic blast froze out nearly 50 Bcf of production and exposed just how tight this market can get when conditions turn hostile.

Freeze-Offs Knock Out 15% of U.S. Production

The cold snap knocked out roughly 15% of total U.S. output from Saturday through Monday. Texas and surrounding regions saw wellhead freeze-offs right when demand spiked. Lower-48 dry gas production stood at 110.0 Bcf/d on Friday, up 3.4% year-over-year, but some of that frozen supply isn’t coming back as quickly as traders hoped.

Add in LNG export demand running at 17.7 Bcf/d and you’ve got a system under real stress. This isn’t just weather—it’s structural tightness meeting seasonal demand head-on.

Storage Cushion Disappearing Faster Than Expected

The EIA report showed a -242 Bcf draw for the week ending January 23, beating consensus at -238 Bcf and well above the five-year average of -208 Bcf. Here’s what concerns me: that draw didn’t capture the worst of the current cold snap.

The next two reports will. Working gas in storage sits at 2,823 Bcf, still 206 Bcf above last year and 143 Bcf above the five-year average. But if next week’s draw exceeds 206 Bcf—which looks likely—stocks drop below year-ago levels.

A second heavy draw puts inventories under the five-year average, flipping sentiment from “ample” to “tight” almost overnight.

Bulls Firmly in Control, But Watch the Forecasts

My weekly chart shows price cleared the 52-week MA at $3.875 and closed above the previous main top at $4.326. The bulls are firmly in control. February’s rally to that 3-year high was amplified by massive short-covering that we don’t have in the March contract, so I don’t expect the same vertical move. But the setup still favors higher prices near-term.

I live on the Gulf Coast side of Florida, and we’re bracing for extreme cold this weekend—temperatures we rarely see down here. The cold extends all the way to Miami. But here’s the thing: we knew this was coming all week. So did the market. I suspect it’s already priced in. What traders are watching now is the 10-15 day forecast, and that can shift over the weekend.

Bottom line: with another cold week ahead and the next storage report likely showing a 200+ Bcf draw, the near-term setup favors the bulls. But watch those extended forecasts closely. This is a headline-driven trade that’ll turn fast if the cold breaks early.

More Information in our Economic Calendar.