Gas Analyst Flags ‘Historic Cold’

In an EBW Analytics Group report sent to Rigzone by the EBW team on Tuesday, Eli Rubin, an energy analyst at the company, noted that “historic cold launche[d]… soaring NYMEX gas futures”.

“Frigid weather is set to reshape the near-term natural gas outlook as Arctic air masses flash across the eastern U.S. and the huge weather demand gain over the MLK [Martin Luther King Jr.] weekend threatens severe market dislocation,” Rubin said in the report.

“DTN’s 278 gHDDs for Week 2 presents chances for the coldest weekly gHDD total since February 2021,” he added.

“Saturday may reach 45 gHDDs – threatening production freeze-offs as Marcellus temps drop toward 0°F and the Bakken reaches -25°F. Risks are high for Rockies, MidCon, and Texas, but the current outlook suggests limited regional supply losses,” he continued.

“Still, spot prices are likely to spike into the weekend. Weather models often misjudge the magnitude and extent of severe cold – and any shifts colder could put more supply at risk,” he said.

Rubin went on to state in the report that the “frigid weather pivot comes with speculator short positions at a 14-month high – suggesting further bullish risks as shorts are forced to buy back gas”.

The EBW analyst warned in the report, however, that volatility will stay high, and said any weather model warming into mid-February could allow a near-term price spike to eventually soften.

Rubin highlighted in the EBW report that, “fundamentally, the immediate-term consequences of cold may be to wipe out the 190 billion cubic foot natural gas storage surplus to five-year norms in mid-January”.

“While subject to a broad range of uncertainty depending on the magnitude and expanse of cold – and resulting production freeze-offs – current projections suggest a huge storage draw above 750 billion cubic feet over Weeks 1-3,” he said.

“This projection is slightly larger than the cumulative 730 billion cubic foot draw over the first ten weeks of the withdrawal season. Moderate storage deficits to five-year norms into early February are possible nationally, extending near-term support,” he continued.

“East and Midwest deficits may rise, and plunging South Central regional stocks will offer support into late winter. Still, the March contract – far more insulated from near-term weather risks – is poised to become the NYMEX front-month in just nine days,” Rubin went on to note.

Rubin stated in the EBW report that “frigid short-term weather lopping off storage surpluses brings tighter 2026 injection season fundamentals back into view”.

The EBW analyst warned that “weather shocks remain a primary risk over the next 30-45 days”. He added that, in the spring, “year-over-year storage comparisons to a historic spring 2025 injection season are likely to appear bullish”.

“Long-term bearish catalysts – such as a flood of more than four billion cubic feet per day of Permian pipeline takeaway capacity – are several months away in 2H2026,” he said.

“If near-term cold verifies below expectations, however, the lack of a demand-pull suggests this bullish long-term set up may be less consequential,” he added.

“While the extent of production losses remains an open question, a sixth straight winter with a massive Arctic outbreak should help support long-term winter contract risk premiums,” Rubin went on to note.

In Tuesday’s report, EBW predicted a “surging cold” trend for the NYMEX front-month natural gas contract price over the next 7-10 days and a “spike and soften” trend over the next 30-45 days.

EBW states on its website that it provides independent expert analysis of natural gas, electricity, and crude oil markets. The company highlights on its site that it has teamed up with DTN, which it describes as “the global industry leader known for hazardous weather detection and prediction, forecast modeling, decision analytics, GIS and interactive mapping”.

Rubin is described on EBW’s website as “an expert in econometrics, statistics, microeconomics, and energy-related public policy”.

“He is instrumental in designing the algorithms used in our models, and in assessing the potential discrepancies between theoretical and practical market effects of models and historical results,” the EBW site goes on to state.

Rigzone talked to several analysts on Monday about the rising U.S. natural gas price. To see that article, click here.

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