Colder weather boosts heating demand, traders cover short positions
Speculators’ short bets highest since November 2024, CFTC reports
LSEG projects increased gas demand, colder temperatures through Jan 27
By Scott DiSavino
NEW YORK, Jan 20 (Reuters) - U.S. natural gas futures soared 27% to a three-week high on Tuesday on forecasts for much colder weather and higher heating demand over the next two weeks than previously expected that forced some traders to cover short positions.
After falling to a 13-week low before the long Martin Luther King Jr. holiday weekend, front-month gas futures for February delivery (NGc1) on the New York Mercantile Exchange (NYMEX) jumped 82.9 cents, or 26.7%, to $3.932 per million British thermal units (mmBtu) on Tuesday.
That was the biggest daily percentage gain since prices soared by a record 46.5% on January 27, 2022. The price move, which put the contract on track for its highest close since December 30, also boosted historic or actual 30-day close-to-close futures volatility to 116.4%, its highest since April 2023.
Traders noted that much of that futures price gain likely came as speculators covered massive short positions. Before the long holiday weekend when the weather forecasts turned much colder, speculators boosted their short bets in futures and options (3023651MSHT) on the NYMEX to their highest since November 2024, according to the U.S. Commodity Futures Trading Commission’s Commitments of Traders report.
Looking forward, the premium of the front-month over the second-month (NGc1-NGc2) rose to 78 cents per mmBtu, its highest since February 2014, which boosted the premium of futures for February 2026 over March 2026 (NGG26-H26) to a record high.
In the cash gas market, extreme cold in the Northeast region boosted next-day gas prices in New York (NG-CG-NY-SNL) by almost 200% to $11.76 per mmBtu, their highest since February 2025.
In Texas, meanwhile, next-day gas prices at the Waha Hub (NG-WAH-WTX-SNL) in the Permian Shale in West Texas remained in negative territory for a fifth day in a row for the eighth time this year as pipeline constraints trapped gas in the nation’s biggest oil-producing basin.
<h3>SUPPLY AND DEMAND</h3>
Financial firm LSEG said average gas output in the Lower 48 states slid to 108.8 billion cubic feet per day (bcfd) so far in January, down from a monthly record high of 109.7 bcfd in December.
Meteorologists projected weather across the country would remain mostly colder than normal through February 4 with the most frigid days expected around January 23-27.
LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 150.0 bcfd this week to 168.8 bcfd next week. Those forecasts were higher than LSEG’s outlook on Friday.
With temperatures forecast to average just 21.1 degrees Fahrenheit (-6.1 Celsius) across the country on January 24 and expected to keep averaging in the low 20s F through January 27, LSEG projected total demand, including exports, would reach 176.8 bcfd on January 26.
That would fall short of the Lower 48 daily demand record of 181.2 bcfd set on January 21, 2025, when temperatures across the country averaged just 19.4 F, according to LSEG data.
Average gas flows to the eight large U.S. LNG export plants held at 18.5 bcfd so far in January, matching the monthly record high set in December.
Week Week Year Five-ye
ended ended ago ar
Jan 16 Jan 9 Jan average
Forecast Actual 16 (2021-2
025)
Jan 16
U.S. weekly -118 -71 -228 -191
natgas storage
change (bcf):
U.S. total 3,067 3,185 2,924 2,888
natgas in
storage (bcf):
U.S. total +6.2% +3.4%
storage versus
5-year average
Global Gas Current Prior This Prior Five-Ye
Benchmark Day Day Month Year ar
Futures ($ per Last Average Average
mmBtu) Year 2025 (2021-2
025)
Henry Hub 3.78 3.10 3.72 3.62 3.79
(NGc1)
Title Transfer 12.27 12.01 14.67 11.94 18.51
Facility (TTF)
(TRNLTTFMc1)
Japan-Korea 11.16 10.23 14.16 12.24 18.12
Marker (JKM)
(JKMc1)
<h3>LSEG U.S.</h3>
Global Forecast
System (GFS)
Heating,
Cooling and
Total Degree
Days
Two-Week Total Current Prior Prior 10-Year 30-Year
Forecast Day Day Year Norm Norm
<h3>U.S. GFS 551 496 487 435 453</h3>
Heating Degree
Days (HDD)
<h3>U.S. GFS 1 3 1 3 3</h3>
Cooling Degree
Days (CDD)
U.S. GFS Total 552 499 488 438 456
Degree Days
(TDD)
<h3>LSEG U.S.</h3>
Weekly GFS
Supply and
Demand
Forecasts
Prior Current Next This Five-Ye
Week Week Week Week ar
Last (2021-2
Year 025)
Average
for
Month
U.S. Supply
(bcfd)
U.S. Lower 48 109.0 107.8 108.2 101.1 98.6
Dry Production
U.S. Imports 9.7 10.0 9.7 N/A 9.6
from Canada
<h3>U.S. LNG 0.1 0.1 0.0 0.1 0.1</h3>
Imports
Total U.S. 118.8 117.9 117.9 N/A 108.3
Supply
U.S. Demand
(bcfd)
U.S. Exports to 3.8 3.1 3.2 N/A 2.9
Canada
U.S. Exports to 6.1 5.7 5.7 N/A 5.8
Mexico
U.S. LNG Export 18.3 18.9 18.5 13.4 12.8
Feedgas
U.S. Commercial 15.9 19.8 24.1 23.2 17.3
<h3>U.S. 26.5 33.6 42.4 41.0 29.9</h3>
Residential
U.S. Power 32.1 33.5 37.7 40.9 32.5
Plant
U.S. Industrial 25.4 26.7 28.0 27.7 26.0
U.S. Plant Fuel 5.4 5.3 5.3 5.4 5.2
U.S. Pipe 2.9 3.3 3.8 2.9 4.4
Distribution
U.S. Vehicle 0.1 0.1 0.1 0.1 0.2
Fuel
Total U.S. 108.3 122.4 141.4 141.2 115.5
Consumption
Total U.S. 136.6 150.0 168.8 N/A 137.0
Demand
N/A = Not
Available
U.S. Northwest 2026 2026 Pr 2025 2024 2023
River Forecast Current ior Day % of % of % of
Center (NWRFC) Day % of % of Norma Normal Normal
at The Dalles Normal Normal l Actual Actual
Dam (Fiscal Forecast Forecast Actua
year ending Sep l
30)
Apr-Sep 96 98 76 74 83
Jan-Jul 95 98 78 76 77
Oct-Sep 100 102 80 77 76
U.S. weekly
power
generation
percent by fuel
<ul>
<li>EIA</li>
</ul>
Week Week 2025 2024 2023
ended ended
Jan 23 Jan 16
Wind 14 13 11 11 10
Solar 5 5 6 5 4
Hydro 7 7 6 6 6
Other 1 1 1 1 2
Petroleum 0 0 0 0 0
Natural Gas 36 36 40 42 41
Coal 19 17 18 16 17
Nuclear 19 20 18 19 19
<h3>SNL U.S.</h3>
Natural Gas
Next-Day Prices
($ per mmBtu)
Hub Current Prior This Prior Five-Ye
Day Day Month Year ar
Last Average Average
Year 2025 (2021-2
025)
Henry Hub 3.06 2.92 4.13 3.52 3.72
(NG-W-HH-SNL)
Transco Z6 New 11.76 3.97 8.77 3.53 3.56
York
(NG-CG-NY-SNL)
PG&amp;E Citygate 2.04 2.02 3.87 3.42 5.47
(NG-CG-PGE-SNL)
Eastern Gas 2.62 2.56 3.74 2.79 2.96
(old Dominion
South)

*
Chicago 2.96 2.71 3.93 3.23 3.60
Citygate
(NG-CG-CH-SNL)
Algonquin 11.85 10.50 15.67 6.08 5.04
Citygate
(NG-CG-BS-SNL)
SoCal Citygate 2.72 2.69 4.49 3.60 5.71

*
Waha Hub -0.45 -1.22 3.27 1.15 2.88

*
<h3>AECO 1.41 1.37 1.22 1.13 2.13</h3>

*
ICE U.S. Power
Next-Day Prices
($ per
megawatt-hour)
Hub Current Prior This Prior Five-Ye
Day Day Month Year ar
Last Average Average
Year 2025 (2021-2
025)
New England 143.14 120.00 147.8 77.61 61.79
(E-NEPLMHP-IDX) 8
PJM West 103.55 82.17 75.11 60.23 54.47
(E-PJWHRTP-IX)
Mid C 20.74 13.72 52.79 44.81 68.96
(W-MIDCP-IDX)
Palo Verde 17.00 15.56 44.47 34.82 59.94
(W-PVP-IDX)
<h3>SP-15 20.02 15.46 39.98 28.44 53.02</h3>
(W-SP15-IDX)

603393

U.S. natural gas futures surged 27% to a three-week high due to forecasts of colder weather and increased heating demand, prompting traders to cover short positions. The front-month gas futures for February delivery rose to $3.932 per million British thermal units. Speculators had previously increased their short bets, leading to significant price volatility. Average gas demand is projected to rise significantly, with temperatures expected to remain below normal through early February. Next-day gas prices in the Northeast spiked nearly 200%, while prices in Texas remained negative due to pipeline constraints.

US natgas futures soar 27% to 3-week high on frigid weather forecasts, short covering