An Overview Of How To Understand The Natural Gas Fair Value Today And Where We Are Headed
Natural gas prices are falling today following the bearish weekend weather model revisions. The total impact on natural gas storage was ~75 Bcf, and our view has been that the market is currently far too bearish on prices.
But as with anything during winter gas trading, prices will follow the ebbs and flows of the weather model updates. However, readers should be aware of the fundamental dynamic and where the “fair” value is.
With the prompt month hovering around $3.07/MMBtu and April and May contracts trading below $3/MMBtu, we think the market has priced in most of the downside. In 2025, the low we saw during the shoulder season was $2.8/MMBtu, and comparatively speaking, fundamental balances are tighter this year vs H1 2025.
Lower 48 natural gas production has recovered to ~109.6 Bcf/d over the weekend. Despite the production recovery, the drop in Canadian gas net imports kept total gas supplies flat.
And thanks to the structurally higher LNG + Mexico gas exports, net gas supplies are still down ~1.5 Bcf/d y-o-y.
Net Gas Supplies
Looking at our projections, our natural gas storage forecast has early April storage at 1.732 Tcf.
Bearish weather model revisions over the weekend increased our EOS by ~75 Bcf.
By November 2026, we have natural gas storage recovering back to ~3.8 Tcf or in line with the 5-year average.
This is why it’s extremely important when investing/trading in natural gas to understand the fundamental backdrop. In order to get a clear picture of where we are headed, we must first understand whether the market this year will be oversupplied or undersupplied. From there, we gauge the general direction of where we are headed.
With that, let’s look at some differences between 2025 and 2026.