Natural gas futures finished the holiday-shortened week hovering around $3, a price level that continues to guide near-term sentiment. Storage trends and changing weather forecasts remain the main drivers, while LNG exports provide some support but have not yet tightened the market. At this time, investors may want to keep an eye on natural gas-focused stocks such as Expand Energy EXE, Excelerate Energy EE and Coterra Energy CTRA.
Natural gas prices hovered around $3 per million British thermal units (MMBtu) throughout the week, showing limited volatility and no clear move higher or lower. U.S. Henry Hub futures ended Friday at $3.103 per MMBtu, about 2% lower for the week. Early gains tied to colder weather forecasts quickly faded as selling returned, highlighting the market’s habit of pulling back after rallies. The February contract also dropped sharply, falling from the mid-$3.50 range to around $3.12, its lowest level since mid-2020. Overall, the week showed a market caught between pockets of stronger demand and persisting supply and inventory pressure.
The latest government storage report failed to lift prices. Gas inventories fell by 71 billion cubic feet (Bcf) for the week ended Jan. 9, far less than the five-year average draw of 146 Bcf and well below last year’s decline. Total storage now stands at 3,185 Bcf, which is 106 Bcf above the five-year average. This growing surplus has strengthened the view that supply remains plentiful, even in the middle of winter. As a result, the market is hesitant to expect a tighter balance until storage withdrawals clearly exceed normal seasonal levels.
Weather forecasts remain the primary swing factor for natural gas prices. While colder temperatures are expected in parts of the United States later in January, recent mild conditions have capped heating demand and muted the impact of brief cold shots. At the same time, LNG exports continue to provide a steady outlet for U.S. supply. Between Jan. 8 and Jan. 15, 33 LNG vessels departed U.S. ports, carrying a combined 127 Bcf of gas, even as overall production stayed resilient. Strong feedgas flows support demand, but they have not yet been sufficient to offset the drag from high inventories and steady output.
Looking ahead, attention turns to the next storage report and early-week weather model updates, which could reset expectations for the balance of winter. With prices already hovering near multi-year lows for the front-month contract, the market appears to have priced in a fair amount of bearish news. Any combination of colder-than-expected weather or firmer withdrawals could quickly shift sentiment.
For longer-term, natural gas-focused investors, the current setup still offers reasons for cautious optimism. Export demand remains structurally strong, global gas markets are showing renewed sensitivity to cold weather, and U.S. production growth is showing signs of discipline. Against this backdrop, investors may continue to focus on names such as Expand Energy, Excelerate Energy and Coterra Energy as they look for exposure to a potential improvement in natural gas fundamentals over time.
