Natural Gas Update January 6,2026

Overview

Natural Gas-- NG is down 15.1 cents at $3.372
NG futures are back down after a late day rally Monday took the contract to the high for the day. NG is still being pressured by warm forecasts for most of January. Lower feedgas volume is likely also pressuring prices. As today's NGI headline reads:" January warmth lingers."

On Monday, the 14 day HDD forecast was seen at 369, up 2 from Friday's forecast, but still lagging the 30 year normal level of 458 HDD's. NOAA 6-10 day forecast shows above normal in northern and central areas but near normal on the Gulf Coast.

Yesterday's Henry Hub next day cash price fell below $3.00. In the early morning, the next day Henry Hub cash was trading at $2.790 versus NG February spot futures printing $3.395. This differential of 60 cents was much greater than the 15 cent differential seen mid-week last week. The large differential is an impediment to NG spot futures rallying significantly.

US LNG feedgas demand is down overnight, as Corpus Christi begins maintenance on Corpus Christi Pipeline. Market News estimates US feedgas of 17.8 BCF/d today, down 0.9 BCF/d from yesterday’s levels. The maintenance though is only seen lasting one day.

Early estimates for this week's EIA gas storage data are calling for a draw of 114 to 124 BCF. This compares to last year's draw of 40 BCF and the 5 year draw of 108 BCF. Yet, Celsius Energy sees gas storage data in the coming weeks showing draws lagging well behind the 5 year average and last year's draws for the periods, such that Celsius predicts that the current year's storage is seen rising to a triple digit surplus to both last year and the 5 year average.

CFTC data issued Monday for the week ended last Tuesday December 30 showed money managers covered shorts thus dropping their net short positioning by 22,176 contracts to a total of 83,730 contracts.

In notable trades in LN/NG options seen Monday, the February $5 call open interest on the CME rose by over 9,000 contracts. The February $5/$6 call spread traded heavily between 0.9 and 1.4 cents. The call spread is again today actively bid for at 0.7 cents and offered at 0.9 cents. Also seen Monday, the February March CSO $1.00 call traded 9.5 cents. The February march futures spread settled Monday at 63.0 cents. In the April October 6 month CSO, the minus 75 cent put was purchased against selling of 2.5 times as many of the minus $1.00 puts making for a flat cost for the buyer of the minus 75 cent put. Open interest for the April $4.00 call on the CME fell by 3,408 contracts. Part of the open interest drop was due to the call having been sold in a call butterfly. The $3/$4/$5 call butterfly traded 16.1 cents.

Technically, momentum for the spot NG futures basis the DC chart is getting oversold. The last 4 days have seen the largest dollar decline since January 3, 2023 and the largest four day percentage decline since Thursday, Dec. 2, 2021. (WSJ)

NG spot futures are again attacking support of 3.355-3.357, which was yesterday's low. Below that support comes in at 3.290-3.296. Resistance comes in at 3.507-3.509, which was almost tested with the overnight high of 3.502. Above that resistance is seen at the gap area created over the weekend at 3.563-3.572. 

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