Analyst Says Bearish Gas Risks Growing

EBW Analytics Group Energy Analyst Eli Rubin warned, in an EBW report sent to Rigzone on Tuesday, that “bearish” medium-term NYMEX gas risks are “growing into the Spring”.

“The long holiday weekend offered a net weather demand loss, even as a brief cold shot emerges early next week,” Rubin said in the report.

“Technicals point lower, and signs are growing that next week may feature the last triple-digit EIA [Energy Information Administration] storage draw of the winter before warming in early March,” he added.

Rubin noted in the report that natural gas production is rising steeply, “reaching year to date highs Monday and setting the stage for a weakening spring outlook”.

“Prompt supply strength is most prominent in the Marcellus and Permian, but supply tailwinds are also gathering for late 2026 alongside a major Haynesville rig count increase,” he said.

The EBW Energy Analyst said bearish caution surrounding another cold shot into early next week may postpone a sell-off. He warned, however, that “the year over year storage comparison may flip from a 97 billion cubic foot deficit to a 165 billion cubic foot surplus into early March, chances for a late-winter run higher are fading, and risks for another mild spring threaten sub-$3.00 per million British thermal unit (MMBtu) gas prices in the early injection season”.

Phil Flynn, a senior market analyst at the PRICE Futures Group, told Rigzone in an exclusive interview on Monday that the U.S. natural gas price was down “because of Spring fever”.

“The snowpacks across the country have melted, especially in the Midwest where above normal temperatures are putting … downward pressure on natural gas,” he added.

“Even with a return of winter later next week, is it going to be cold enough to make a significant adjustment in natural gas supplies?” he continued.

“We’re getting closer and closer to real Spring – not this little taste of spring that we’re getting this week,” he went on to state.

Spot Price Near $8 per MMBtu

In its latest short term energy outlook (STEO), which was released earlier this month, the U.S. Energy Information Administration (EIA) highlighted that, in January, the Henry Hub spot price for natural gas averaged $7.72 per MMBtu.

The EIA outlined in the STEO that the price rose “sharply from December’s average of $4.26 per MMBtu” and marked “the highest nominal monthly average since September 2022”. The EIA also noted in the STEO that, on a daily basis, pricing at the hub set a nominal record of $30.72 per MMBtu on January 23.

“These price increases reflected stronger natural gas demand driven by widespread colder than normal weather across much of the United States, particularly in the latter half of the month,” the EIA said in its February STEO.

“Winter Storm Fern intensified heating demand while natural gas production declined because of temporary well freeze-offs. For the week ending January 30, the combination of strong demand and a drop in production led to a withdrawal of 360 billion cubic feet of natural gas from inventory, the largest storage withdrawal on record,” it added.

“Although market tightness in January was acute, futures prices indicate the market perceived the tightness as relatively short-lived. The February futures price settled significantly higher than the March price on January 28,” the EIA continued.

“The February natural gas futures contract for delivery at Henry Hub settled at $7.46 per MMBtu on January 28, while the March contract closed at $3.73 per MMBtu, the largest difference between the front and following-month prices since at least 2014,” it went on to state.

The EIA also highlighted in its STEO that, on February 2, “the new March 2026 prompt-month contract posted its largest one-day decline in 30 years, according to Bloomberg L.P, falling 25.7 percent to $3.24 per MMBtu as some weather forecasts indicated relatively mild weather for much of the country in mid-February”.

To contact the author, email andreas.exarheas@rigzone.com