The winter heating demand season is coming to an end soon, and US natural gas storage managed to go from a +200 Bcf surplus to neutral.
The recent weather model updates have been extremely volatile with ECMWF-EPS showing a spike in heating demand over the weekend only to see the models lose ~30 gas-weighted HDDs in the last 24 hours.
From a storage standpoint, the next few weeks are expected to be uneventful... for now.
The current weather projections show a warmer-than-normal first half to March.
6-10 Day
10-15 Day
Is there a scenario where prolonged colder-than-normal weather after March could push natural gas prices higher?
Yes, but only to an extent. Unlike the cold blast we saw at the end of January, any cold event will only delay the injection season as opposed to meaningfully reducing storage.
Using EIA’s storage data going back to 2010, here are the largest withdrawals in April:
(Thanks Claude!)
And here are the figures for March:
As you can see, the largest storage withdrawals in March usually occurred in the first week. With the latest forecast showing that as an unlikely event, the most bullish outcome, assuming a cold shift in mid-March and prolonged cold in April, is for storage to move down to ~1.65 Tcf.
But as we noted in our natural gas updates last week, we believe natural gas prices today are undervalued, especially considering the following facts:
Lower 48 gas production growth will be muted through Q3 2026 due to limited takeaway capacity in both the Permian and Northeast.
Natural gas fundamental balance is tighter in 2026 vs 2025. Total gas exports are higher and support higher Lower 48 gas production.
A normal summer this year would push natural gas storage by November down to ~3.65 Tcf.
As a result, the curve is undervalued today relative to where fundamentals are headed.
Source: CME
Let’s look at some of the main drivers for the natural gas market in 2026.