Natural Gas: Cold Snaps, Supply Disruptions Could Spark Breakout Toward $5 Target

Cold weather and supply disruptions have driven sharp swings between $2.60 and $5 per MMBtu.
Storage levels offer some cushion, but repeated cold snaps could still push prices higher.
A breakout above $4 would likely open the door for a move toward $5.

Prices for near-term Henry Hub contracts have been very volatile, swinging between about $2.60 and $5 per MMBtu. Right now, prices sit near the middle of that range, slightly closer to the lower end. If cold conditions persist or another severe weather event hits, a move back toward $5 per MMBtu looks likely.

At the same time, supply is also under pressure. Bad weather is disrupting production, particularly in the Permian Basin and the Gulf of Mexico, which adds to the risk of higher prices.

Will the Imbalance Between Supply and Demand Keep Pushing Prices Up?

Weather plays a big role in the natural gas market, affecting both demand and supply.

On the demand side, cold weather pushes up energy use by power producers and households. At the same time, producers face weather-related disruptions, which together give buyers more control in the short term and support higher prices.

That said, the situation is partly eased by storage levels. In the week ending January 16, withdrawals from gas storage were 120 billion cubic feet, well below the five-year average of 190 billion cubic feet. This suggests there are still decent запас reserves available.

Looking ahead, forecasts point to warmer weather in early February. However, forecasters warn that more cold snaps are still possible. If several severe weather events hit in quick succession, prices could climb above the recent highs seen in early December.

Finally, the storms are also hurting the wider economy. According to Bank of America estimates, the damage could reduce GDP growth by about 0.5 to 1.5 percentage points in the first quarter of 2026, followed by a strong rebound in the second quarter.

The International Energy Agency expects natural gas prices to stay fairly stable this year. It sees prices averaging about $3.46 per MMBtu for the full year and around $3.38 per MMBtu in the first quarter.

However, this forecast was finished on January 8 and assumed milder weather in January. Given the colder conditions seen in recent days, that assumption now looks too optimistic, and the actual average price could end up higher.

Looking ahead to next year, the agency expects prices to rise more sharply, with an average of about $4.59 per MMBtu. This reflects tougher overall market conditions.

Over the longer term, price forecasts remain uncertain. Ongoing geopolitical tensions add another layer of risk and could push volatility higher in the years ahead.

A Pause Before Price Further Increases on HenryHub?

Cold weather and supply problems have driven the recent rise in prices, which began when the market held above the $2.60 per MMBtu level. Buyers are now taking a pause, with prices consolidating just below the $4 per MMBtu mark.

The next clear move should come once prices break out of the $3.40 to $3.90 range. If prices move above $4, a rise toward the $5 level becomes a realistic outcome.

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