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Energy Market Snapshot Feb 4, 2026

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Weather Outlook

Winter’s grip is loosening—though not before one more burst of Arctic air sweeps through the Midwest and East this weekend. The cold snap will be brief, lasting just 2–3 days before temperatures rebound as milder conditions move in from the West.
 
Looking ahead, both U.S. and European models keep the truly frigid air bottled up in Canada through late February. The first half of March should trend milder across most of the country, though the Northeast could still see a few more cold spells before colder risks return later in the season.
 
6-10 DAY AND 8-14 DAY TEMP OUTLOOK

Market Highlights

  • March 2026 Natural Gas (Prompt Month): $3.24/MMBtu (↓ $1.117)
  • Crude Oil (Prompt Month): $62.14/bbl (↓ $3.07)
Natural gas futures tumbled at the start of the week as traders booked profits following last week’s weather-driven rally. The rapid warmup erased the prior 74.5-cent gain, reflecting a sharp drop in short-term heating demand.
 
Production levels are recovering quickly as freeze-offs diminish, particularly in Appalachia. Daily output is now around 106.2 Bcf/d, only 2 Bcf/d below January averages. LNG feedgas has rebounded as well, reaching 18.3 Bcf/d with key facilities at Freeport and Sabine Pass returning strong flows.

EIA Natural Gas Storage Report

The weekly EIA Natural Gas Storage Outlook report tracks the volume of natural gas in underground U.S. storage, revealing weekly fluctuations and comparison against 5-year averages.

Storage and Supply

  • EIA Storage Withdrawal: 242 Bcf (above the 5-year average of 208 Bcf)
  • Despite the drawdown, storage remains within normal range for winter.
  • Production Outlook: Expected to rise steadily through February.
Electric prices surged during last week’s extreme cold—PJM West Hub and NY Zone J both cleared over $800/MWh in the day-ahead market, more than 1,600% above normal. Those spikes have since eased with moderating weather.

WINTER 2025/2026 NATURAL GAS PRICING

WINTER 2025/2026 NATURAL GAS PRICING

What to Watch and Why It Matters

Pricing
  • As temperatures rise, gas prices have fallen fast—March contracts dropped from above $4.40 to $3.20 in just 24 hours.
  • Production has stabilized after the recent freeze, helping balance supply.
  • Natural gas around $3.40–$3.50/MMBtu remains near the upper end of its 24‑month range.
Actionable Insight
  • February electricity index prices are still inflated at $161.59/MWh (≈ $0.16/kWh), but softening trends are emerging for late Q1.
  • Watch for favorable pricing opportunities in March–April 2026 and especially next winter (Dec–Mar 2027).
  • If forward prices for next winter drop below $50/MWh, consider hedging up to 50% of your exposure to guard against another volatile season.
Looking Ahead: Grid Reliability
The 2027/2028 PJM capacity auction fell short of expected demand, raising the risk of brownouts or blackouts in coming years. Now is the time to evaluate:
  • Backup generation or solar-plus-battery systems
  • Power quality and resilience measures
  • Enrollment in Demand Response programs that pay you for reducing load during peak events

NATURAL GAS PRODUCTION, LOWER 48 STATES

NATURAL GAS PRODUCTION, LOWER 48 STATES

Capacity Market Notes

The Base Residual Auction for the 2027/2028 delivery year (June–May) cleared slightly higher at $333.44 per MW-Day. However, for the first time, the auction fell short of securing enough capacity to meet projected demand by more than 6,000 MW.
 
This shortfall raises reliability concerns looking ahead, including the potential for rolling brownouts or blackouts if capacity doesn’t improve. PJM could even hold a supplemental capacity auction, similar to what occurred in 2015/2016.
PJM capacity auction results

NYMEX PRICE TREND ANALYSIS

natural gas chart Oct 2025

The NYMEX 12-Month Strip averages the next 12 months of Henry Hub futures into one price. It’s a powerful indicator of market sentiment — allowing traders (and end users) to lock in year-long coverage at a blended rate.

Watching shifts in this strip helps gauge the broader direction of gas markets, beyond just the prompt month.

(PJM) AD HUB DA & FWD TREND ANALYSIS

(PJM) AD HUB DA & FWD TREND ANALYSIS
natural gas chart Oct 2025

NYMEX PRICE TREND ANALYSIS – NEXT 24 MONTHS

NYMEX PRICE TREND ANALYSIS – NEXT 24 MONTHS

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