New York, Jan 20, 2026, 13:43 EST — Regular session
- NYMEX February natural gas surged roughly 25% in late-morning trading, fueled by colder U.S. weather forecasts.
- Volatility surged after traders stepped back from bearish positions, pushing the front-month premium noticeably higher.
- Gas-linked funds and producers gained ground, driven by a sharp rise in cash prices across parts of the U.S. Northeast.
U.S. natural gas futures surged Tuesday, ending a weeks-long decline as traders reacted to a chillier late-January forecast and covered shorts. The NYMEX February contract climbed 25.2%, settling at $3.885 per million British thermal units (mmBtu) on a delayed quote. (MarketWatch)
This shift is significant, given the market was previously tilted the opposite direction: mild conditions and ample supply pushed prices down to a 13-week low right before the Martin Luther King Jr. holiday weekend. But as weather forecasts flipped, traders scrambled, turning positioning into a catalyst. (BOE Report)
Earlier, February futures surged 82.9 cents, or 26.7%, to $3.932 per mmBtu—marking the steepest daily percentage jump since January 2022. Traders cited heavy short-covering, noting that speculators had amassed their largest net short position in NYMEX gas futures and options since November 2024, according to U.S. Commodity Futures Trading Commission data. (BOE Report)
Short covering happens when traders rush to repurchase contracts they’d previously sold, usually amid a falling market. When it builds momentum, prices can jump sharply before the underlying fundamentals shift.
Supply and demand forecasts edged tighter. LSEG put average Lower 48 output at 108.8 billion cubic feet per day for January so far, down from December’s record 109.7 bcfd. Demand, including exports, is expected to climb from 150.0 bcfd this week to 168.8 bcfd next week as colder-than-normal weather lingers through about Feb. 4, with the coldest stretch hitting between Jan. 23-27. (BOE Report)
LSEG reported average flows to the eight major U.S. LNG export facilities hitting 18.5 bcfd so far this month, tying December’s record high. This underlines steady export demand despite fluctuations in domestic weather. (BOE Report)
Cash markets painted a stark contrast. Next-day gas in New York surged nearly 200%, hitting $11.76 per mmBtu. Meanwhile, West Texas Waha prices lingered below zero for the fifth day in a row, caught by pipeline bottlenecks that trapped associated gas in the Permian basin. (BOE Report)
Gas-linked stocks and funds tracked the broader market. The U.S. Natural Gas Fund (UNG) surged 19% by midday, Expand Energy gained close to 5%, and EQT ticked up about 1%, reports Investors.com. (Investors)
Weather is taking center stage. The National Weather Service forecasts temperatures plunging 15 to 25 degrees Fahrenheit below normal through January’s end across parts of the U.S. Northeast and Midwest. Independent oil analyst Tom Kloza flagged the next two weeks as potentially the “toughest test” for regional heating fuel markets in nearly ten years. (MarketWatch)
But the rally could unravel just as quickly as it took hold. Should forecast models show milder temperatures, or if freeze-offs fall short and production picks up, the front-month premium and volatility could drop sharply.
Traders are eyeing the U.S. Energy Information Administration’s storage report due Thursday, Jan. 22, to see if the cold snap has pushed withdrawals higher. According to EIA data, working gas in storage stood at 3,185 billion cubic feet as of Jan. 9. (U.S. Energy Information Administration)
Looking ahead, the upcoming weather forecasts for the Jan. 23-27 period hold the key. They’ll probably determine if Tuesday’s price jump holds through the week’s close.
