Since December 1, 2025, the natural gas futures market has experienced significant fluctuations. The Henry Hub spot price, a key benchmark for natural gas prices, has seen notable changes due to various factors, including weather patterns and market dynamics. An early December cold snap put upward pressure on natural gas prices, with both the Henry Hub spot price and Calendar 2026 futures prices averaging around $4.30 per million British thermal units (MMBtu) this winter heating season, which was 22% higher than last winter.
However, in recent weeks, U.S. natural gas prices have come under significant downside pressure as the 2025–26 winter withdrawal season may be over before it even started, reflecting a combination of mild weather forecasts and a fundamentally well-supplied market. After early winter rallies driven by brief cold snaps, futures contracts have weakened notably, with February Nymex prices recently sliding toward multi-month lows on forecasts of above-normal temperatures that could suppress heating demand and reduce near-term storage draws. Bal 2026 is currently down $0.935/MMBtu from the December 5th high, while Cal 2027, Cal 2028 and Cal 2029 are down ~$0.20/MMBtu over the same time.
Storage Begins Winter Near Multi-Year Highs
Two central themes weighing on pricing sentiment have been the natural gas storage inventory backdrop and warmer trending weather forecasts. The U.S. entered the 2025–26 winter heating season near record levels with 4% more working natural gas in storage than the previous five-year average with storage starting winter at roughly 3,900 Bcf, among the highest since 2016.
The interplay between storage draws and production dynamics has further shaped market psychology. Despite seasonal withdrawals, storage estimates as of late December still pointed to stocks within the historical range and significantly above the recent five-year norm, mitigating the typical bullish supply squeeze that can accompany the end of the withdrawal period. As a result, even robust draws reported in early December — such as a near-177 Bcf weekly withdrawal — have done little to arrest the downward bias in the futures curve.
EIA Data Reinforces Bearish Inventory Outlook
Most recently, the U.S. Energy Information Administration (EIA) reported a withdraw of 38 billion cubic feet (Bcf) of natural gas from storage in the week ended December 26, 2025. This withdrawal fell short of historical norms for this time of year and further weighed on Nymex natural gas futures. The EIA forecasts that U.S. natural gas stocks will end the winter between 1,800 and 2,000 Bcf, which is 7% – 9% above the five-year average.
From a supply perspective, U.S. production has remained resilient. Dry gas output has largely offset incremental winter demand, underpinned by strong shale performance and associated gas from oil plays. This resilience has helped keep inventories well stocked, reinforcing the bearish tilt as the market looks toward the injection season. Additionally, EIA’s Short-Term Energy Outlook earlier in the season lowered expectations for Henry Hub prices in 2025 and 2026, reflecting structural supply strength and a comfortable inventory base.
Cold Risks Remain, but Upside Appears Limited
Looking ahead, forecasts continue to predict a colder second half of January, with some highlighting risks for temperatures colder than weather models suggest. Although this forecast has been made before and not materialized, if it proves accurate, a larger near-term rally is possible, but not likely.
In the meantime, natural gas storage may exceed the five-year average by more than 150 Bcf due to very mild weather through mid-January. While the approaching cold may drive a short-term rally, the medium-term fundamental outlook suggests that only modest upside is likely. This indicates that while there may be near-term temporary market gains, longer-term price increases are significantly less certain.
With an expectation for working gas in storage at the end of withdrawal season to be more than historical norms, the market will be sensitive to how quickly injections proceed in later March and whether international demand can absorb any incremental U.S. supplies.