Natural Gas Price Hovers Near $3.20 as Storage Draws Challenge Warm Winter

Natural Gas (NG=F): Market Reprices From 2024 Lows Into A Choppy $3–$5 Range

Henry Hub Benchmark Reset: 2025 Average At $3.52/MMBtu After An Inflation-Era Low

The U.S. benchmark Henry Hub price has already gone through a structural reset. The 2025 average came in around $3.52/MMBtu, up roughly 56% from the inflation-adjusted 2024 level, which was the lowest on record. Daily trades in 2025 ran between about $2.65 and $9.86/MMBtu, a wide band but actually a narrower range than the prior year’s chaos, signalling that the market is moving from pure distress to a more “normal” volatility regime.

That move happened even while U.S. dry gas output climbed by roughly 4.5 Bcf/d and LNG exports increased by about 3 Bcf/d in 2025. The message is straightforward: the ultra-cheap phase is over. With Henry Hub now trading the February strip roughly in the $3.20–$3.30/MMBtu zone and the 2025 average already at $3.52, NG=F is sitting on a higher structural floor but still lacks a decisive catalyst to push into the upper end of the recent band.

Regional Hubs Expose The Real Volatility Behind The “Calm” Henry Hub Print

Henry Hub’s $3.52 average hides significant regional dislocations. In the Northeast, Algonquin Citygate prices spiked to about $16.37/MMBtu in January and $14.00/MMBtu in February 2025, the highest for those months since 2022, as a polar vortex collided with pipeline constraints into New England. Transco Zone 6 New York moved in the same direction, showing how quickly local shortages reprice gas when pipe capacity is maxed out.

At the other extreme, the Northwest Sumas hub near the U.S.–Canada border actually saw its annual average drop by about $0.24/MMBtu in 2025 as record Western Canada output from the Montney and softer regional power demand kept the market heavy.

In Texas, Waha and associated Permian hubs periodically traded below zero again heading into early 2026 as pipeline bottlenecks trapped gas behind surging oil-linked production. Those negative prints are telling: supply growth and midstream constraints still dominate basin-level pricing even while the national benchmark hovers in the low-$3s.

Storage, Production And LNG: Why $3 Henry Hub Still Feels Heavy

Fundamentals explain the current lethargy around NG=F. Working gas in U.S. storage for the week ended January 2 stood around 3,256 Bcf, after a draw of 119 Bcf, leaving inventories about 31 Bcf above the five-year average – comfortably within the historical band but still on the “loose” side of neutral. Another report showed a 114 Bcf withdrawal beating both the 52-week and five-year norms; that was a constructive signal but not enough to erase the surplus narrative built during a year of oversized injections.

On the supply side, Lower-48 output running near 109.1 Bcf/d sets a very high base. LNG feedgas flows sit close to record highs, and U.S. LNG export capacity rose enough in 2025 to pull an extra ~3 Bcf/d off the grid. That combination – record domestic production plus structurally higher export demand – is precisely why Henry Hub could climb 56% year on year while still feeling cheap relative to the extremes seen when weather or infrastructure shocks hit.

Warm Winter Shock: Why February NG=F Is Back Near $3.20–$3.30

The short-term tape, however, is being driven by weather, not LNG. February Henry Hub futures have slid to roughly $3.20–$3.30/MMBtu, down about 6% on the day in one of the recent sessions, and marking the lowest levels since mid-October. Another print had front-month futures down about 3% to $3.30, underscoring how quickly warm forecasts can strip out winter risk premium.

The core reason: forecasts for above-normal temperatures across major U.S. heating regions. Heating demand is running below seasonal norms, and the market is repricing from a “late-Q4 polar vortex scare” back into a mild-winter reality. This has dragged the front of the curve lower even as storage withdrawals have finally started beating averages. The curve is signalling that balance is improving, but not fast enough to justify $4+ pricing without a colder pattern.

Forward Curve And Basis: Market Pays For Optionality, Not A Structural Shortage

Natural gas forwards and regional basis trades show a similar tug-of-war. Front-month forwards have softened into early 2026, pressured by weaker near-term heating load and stubbornly strong production. Yet the strip further out still carries a premium versus the 2024 trough, reflecting expectations that LNG growth, coal retirements and incremental power burn will tighten balances over the next few years.

NGI forward data show that regional basis in the Midwest and Northeast continues to price in winter congestion risk even while national balances look more comfortable. The market is effectively paying for option value – the chance that one or two strong cold waves or an LNG-driven demand surprise can flip sentiment without warning. That is why you see a Henry Hub “magnet” around $3.50: the strip is anchored near the new structural average, while daily weather swings push front-month NG=F above or below that mark.

Technical Structure For NG=F: $3.50 Magnet, $3.63 200-Day EMA And The $5.10 Memory

Technically, NG=F is stuck inside a familiar consolidation band. Analysts are treating the $3.50/MMBtu area as a gravitational center for price because it sits near both the 2025 average and the lower edge of a big rollover gap left from the December contract. The 200-day EMA around $3.63 is the key pivot: a clean daily close above that level, preferably on strong volume and a wide green candle, would be the first true confirmation that the next leg of the seasonal trade is starting.

Upside memory is clear: early December highs near $5.10/MMBtu mark the top of the most recent spike, driven by cold weather and storage anxiety. On the downside, repeated tests of the low-$3s and the $3.00 region have held so far, but each warm-weather forecast nudges futures back toward that psychological line. From a pure chart perspective, natural gas has already had the drop and the value zone, but still lacks the momentum trigger to justify an aggressive long.

EIA Price History And Regional Spikes: Why Volatility Is Structural, Not Transient

The EIA’s 2025 recap highlights two core points that matter for NG=F traders. First, inflation-adjusted 2024 Henry Hub prices marked a multi-decade low, and the 2025 recovery to $3.52/MMBtu is more a normalization than a true bull market. Second, daily swings between $2.65 and $9.86/MMBtu show that even “normalization” comes with embedded shock risk.

Northeast hubs blowing out to $16–$14/MMBtu in a single winter, while Sumas softens and Waha occasionally collapses below zero, proves that volatility is now baked into the system: LNG exports, pipe bottlenecks, renewables variability and regional power demand make it impossible for natural gas to trade like a sleepy, mean-reverting commodity from the 2000s. Any valuation of NG=F that ignores these structural volatility drivers is incomplete.

Equities Like EQT As A Levered Read-Through On $3 Gas

The way equities such as EQT trade around Henry Hub provides a real-time feedback loop between the strip and upstream behaviour. EQT shares recently slipped about 2.4% to roughly $50.96 as February gas futures dropped more than 6% to $3.198/MMBtu. The day before, EQT had fallen 4.2% to about $52.20 as the February contract settled near $3.407/MMBtu.

At the balance-sheet level, the EIA shows national cash flows and free cash generation improving with the move from sub-$3 to mid-$3 pricing, but producer equities are clearly trading the strip in real time. When front-month NG=F falls hard, it pulls the entire curve and producer valuations lower, regardless of hedges. Upcoming catalysts – the January 15 storage report and February 17 EQT earnings – will be scrutinized not just for numbers but for hedging strategy, capex discipline and any hint that producers will change volumes if Henry Hub spends too long near $3 instead of $4.

Weather, Sentiment And Storage: The Three Levers For The Next Leg

Short-term direction for NG=F is dominated by three levers. Weather remains the primary driver. An unusually warm U.S. winter has already capped gas futures near $3.20–$3.30/MMBtu, even though draws like 114–119 Bcf per week signal that inventories are finally burning down faster than normal. Any shift to a colder pattern in late January or February can quickly pull price back toward the early-December highs in the $5.00+ zone.

Sentiment is captured by indicators like the Crypto-style Fear & Greed index applied to energy risk and by positioning in managed-money futures. For now, the tape shows risk-off behaviour: traders fade rallies and sell into warm forecasts rather than chase upside.

Storage is the scoreboard. With stocks only ~31 Bcf above the five-year average and withdrawals beating norms, the surplus built in 2024 is eroding. If future EIA reports show continued above-average draws while LNG remains near capacity and production growth moderates, the market will need to reprice Henry Hub higher to incentivize marginal supply.

Directional View On Natural Gas (NG=F): Bias To The Upside – Effectively A Buy With Clear Risk Levels

Putting the numbers together, the current NG=F price zone around $3.20–$3.30/MMBtu sits below the 2025 average of $3.52, well under the recent $5.10 spike, and barely above the 2025 daily low near $2.65. Storage is no longer disastrously oversupplied, withdrawals like 114–119 Bcf are finally outperforming averages, and U.S. LNG export pull continues to rise. At the same time, production is elevated and the winter to date has been anomalously warm, justifying why the market refuses to sustain prices above $4 without a clear weather or supply shock.

On balance, the skew for professional traders at these levels is up, not down. The realistic downside on a continued warm pattern and persistent storage surplus is a retest of the $2.75–$3.00 band. The upside in a late-season cold breakout, combined with strong LNG demand and modest supply discipline, runs back toward $4.50–$5.00/MMBtu.

Netting that risk–reward, the stance on Natural Gas (NG=F) here is bullish – effectively a Buy, but strictly as a high-volatility trade that must be managed around three hard reference points: the $3.00 floor, the $3.50 “magnet” and the $3.63 200-day EMA that marks the line between another failed winter bounce and a genuine move back into the $4–$5 range.

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