NEW YORK, Jan 20, 2026, 07:01 EST — Premarket
- Henry Hub natural gas futures jumped over 20% in early trading.
- U.S. forecasters issued warnings for frigid air sweeping through the Midwest and Northeast, with a major winter storm expected later this week.
- Thursday’s EIA storage report is the next key test traders are watching.
U.S. natural gas futures surged more than 20% early Tuesday as forecasts pointed to a colder stretch in late January, pushing up heating demand expectations. The front-month Henry Hub contract climbed 68.9 cents, or 22.2%, settling at $3.792 per million British thermal units (mmBtu), the key pricing unit for U.S. gas.
This shift is significant since winter weather rapidly boosts consumption, while the market currently holds a weather-sensitive surplus. Just a handful of model updates can flip storage withdrawal forecasts and push funds to unwind short positions.
The U.S. Weather Prediction Center warned that a frigid Arctic airmass will hold highs in the teens and 20s across parts of the Midwest and Northeast on Tuesday, running 15 to 25 degrees below average. Temperatures should ease back on Wednesday. The center also highlighted a “major winter storm” set to develop Friday and move east over the weekend. wpc.ncep.noaa.gov
“The next two weeks are shaping up to be the toughest challenge for Northeastern heating oil & natural gas markets in almost ten years,” independent oil analyst Tom Kloza tweeted late Monday. X (formerly Twitter)
Storage continues to provide a strong buffer. According to the latest federal data, U.S. working gas in underground storage stood at 3,185 billion cubic feet (Bcf) as of Jan. 9 — 106 Bcf above the five-year average — following a weekly withdrawal of 71 Bcf.
That cushion is exactly why this rally might not last. Bulls need the colder forecast to stick and withdrawals to accelerate enough to chip away at the surplus—not just trigger another short-covering spike.
Supply has driven the tug-of-war throughout the winter. Milder temperatures and increased production from major shale basins weighed on prices, keeping futures far below their December highs despite Tuesday’s jump.
Forecasts can shift quickly. The downside is simple: warmer weather in upcoming reports, steady production levels, and a storage surplus that just won’t budge. A sudden fall in LNG feedgas demand due to an export outage would also dampen prices.
Traders are keeping an eye on regional cash markets for signs of stress as the cold snap hits major population centers. Basis—the premium or discount at regional hubs compared to Henry Hub—can jump sharply when pipelines and storage face pressure.
The Energy Information Administration’s weekly storage report is due Thursday at 10:30 a.m. Eastern. This will be a critical read to see if the weather is making an impact on the figures.
