New York, Jan 27, 2026, 13:52 EST — Regular session
U.S. natural gas futures slipped Tuesday following a recent surge to multi-year peaks fueled by storm concerns. The February Henry Hub contract dropped 18.4 cents, or 2.7%, to $6.62 per million British thermal units (MMBtu) in afternoon trading. With the contract set to expire Wednesday, even small changes in forecasts sparked sharp price moves.
The pullback is significant because the market faces two simultaneous shocks: a deep freeze that disrupted production and clogged logistics, and a spot-market surge that pushed some buyers to pay nearly any price for immediate delivery. During the storm, spot natural gas in the U.S. Northeast briefly hit $150 per million Btu, a squeeze that often ripples through the front of the futures curve.
“Natural gas is retreating now that the worst of the cold has passed,” Phil Flynn, senior market analyst at Price Futures Group, told Rigzone. He cautioned, though, that another cold snap could keep weather as the key driver. Art Hogan at B. Riley Wealth highlighted profit-taking after intense short-covering, while EBW Analytics’ Eli Rubin noted freeze-offs hitting about 16 billion cubic feet per day forced nearly 8 billion cubic feet per day in LNG cutbacks. rigzone.com
The February contract closed Monday at $6.80, jumping 29% on the day after hitting $7.439 — the highest level since December 2022 — as Winter Storm Fern squeezed supply and pushed heating demand sharply higher. Shares linked to natural gas showed mixed moves: Expand Energy and EQT gained ground, while Coterra Energy slipped, reported.
Producers and midstream companies are grappling with frozen equipment and power outages across multiple basins, Reuters reported. Gas compressor stations and refineries have also been affected. The storm caused a sharp drop in Lower 48 gas production at its peak, with supply losses estimated at about 20 billion cubic feet per day.
The ripple effect is global: as more U.S. gas is rerouted for domestic heating, less makes it to liquefied natural gas export terminals, tightening supplies for Europe and Asia. Reuters reported U.S. demand could hit 156 billion cubic feet per day, well above January’s average. At the same time, freeze-offs have slashed output and forced feedgas flows to LNG plants lower.
The curve hints at a different story beyond the next few weeks. On Monday, March natural gas settled near $3.90, well below February’s price—a steep backwardation where near-term contracts command a premium over those for spring and summer. Some analysts warn this setup can unwind quickly if forecasts soften, potentially triggering a sharp drop as liquidity shifts away from the expiring February contract.
Tuesday’s trading felt more like a breather than a reversal. The front-month contract remains sharply higher since mid-month, while volatility holds firm. Traders are quick to cover shorts at the slightest sign of fresh freeze-offs.
ING analyst Warren Patterson highlighted the main issue: how long the disruption will persist. He noted early signs production is bouncing back, citing a day-on-day rise in Permian output estimates. Patterson also pointed out a steep decline in gas intake at U.S. LNG plants recently, a trend that might reverse with warmer weather.
The downside risk works both ways. Should the warm spell hit earlier and freeze-offs clear, prices might drop sharply. Yet if another Arctic freeze strikes before pipelines and wells bounce back, the market could face a repeat of last week’s tight supply crunch.
As February options near expiration and the contract moves into its final days, traders are focused on day-ahead power prices, pipeline bottlenecks, and LNG feedgas flows to gauge if demand destruction will hit. The key data release arrives Thursday with the U.S. Energy Information Administration’s storage report, where forecasts center on a 120 billion cubic feet withdrawal.
