Natural Gas Price Today Hits 3-Year Peak as Arctic Cold Grips America

Natural gas prices experienced a dramatic surge this week, closing significantly higher as severe winter weather swept across the United States, disrupting energy supplies and igniting heating demand. The latest market movement reflects a complex interplay between constrained production and weather-driven consumption that shows no immediate signs of easing.

Weekly Surge Breaks 3-Year Records on Supply Disruption

Natural gas prices jumped sharply on Friday, gaining over 11% as March futures contracts responded to the intensifying cold. The advance represented part of a much broader rally, with prices climbing more than 120% over the preceding week after hitting their highest level in three years. This dramatic acceleration in natural gas price today contrasts sharply with the relatively stable conditions that preceded the weather event.

The cold snap that swept across the nation proved particularly disruptive to production infrastructure. Approximately 50 billion cubic feet of natural gas output went offline over a three-day period, representing roughly 15% of total US production capacity. While some production has begun returning online, the supply disruption created a significant supply constraint that continued to underpin natural gas prices through the week.

Extreme Weather Locks Up Production, Boosts Heating Demand Simultaneously

The Arctic conditions creating the production crisis simultaneously triggered a surge in consumption. US Lower-48 dry gas production on the latest data Friday stood at 110.0 billion cubic feet per day, up 3.4% year-over-year, but this modest gain barely compensated for the extraordinary jump in demand. Lower-48 demand reached 128.7 billion cubic feet per day, surging 38.4% year-over-year as heating systems worked overtime against the bitter cold.

Forecasters indicate that below-normal temperatures will persist across the Upper Midwest, Mid-Atlantic, and Northeast regions through early February, extending the demand surge. The Commodity Weather Group specifically highlighted this multi-week forecast window as a continuing source of upward pressure on consumption. This extended weather outlook explains why natural gas prices today remain elevated despite the moderation from Wednesday’s 3-year high.

LNG export operations also felt the impact, with net flows to US export terminals reaching 17.7 billion cubic feet per day, down 8.3% week-over-week as domestic priorities took precedence during the cold emergency.

Storage Levels Fall Faster Than Expected, Supporting Higher Prices

This week’s inventory data from the Energy Information Administration proved supportive for the market. Gas storage levels for the week ended January 23 declined by 242 billion cubic feet, exceeding both the market consensus estimate of 238 bcf and the 5-year weekly average draw of 208 bcf. Despite the larger-than-forecast withdrawal, overall inventories remained adequate relative to historical norms, standing 9.8% above year-ago levels and 5.3% above the 5-year seasonal average.

The apparent paradox—prices surging despite ample supplies—reflects the market’s focus on near-term supply disruptions rather than overall abundance. Cold weather events create immediate supply shocks that override longer-term inventory considerations. Meanwhile, European storage presented a starkly different picture, with gas reserves at 43% of capacity as of late January, well below the 58% seasonal average for this time of year.

Production Recovery Gradual as Market Eyes Supply Outlook

While some production capacity returned during the week, the recovery trajectory remains gradual. Active natural gas drilling rigs numbered 125 in the latest reporting week, up three from the previous count but still modestly below the 2.25-year high of 130 reached in late November. The year-over-year comparison underscores significant industry expansion, with rig counts having more than doubled from the 94-rig low recorded in September 2024.

Looking ahead, supply forecasts suggest continued pressure on natural gas prices. The Energy Information Administration recently reduced its 2026 dry gas production estimate to 107.4 billion cubic feet per day, down from the prior month’s projection of 109.11 bcf/day. This downward revision signals that production capacity may tighten more than previously expected, supporting the fundamental case for elevated natural gas price levels going forward.

On the demand side, electricity generation provided a mixed picture. US Lower-48 power output in the week ended January 24 declined 6.3% year-over-year to 91,131 gigawatt hours, likely reflecting seasonal factors and efficiency improvements. However, the 52-week rolling total showed resilience, with output up 2.1% year-over-year at over 4.28 million gigawatt hours.

The convergence of production disruptions, extended cold forecasts, larger-than-expected storage withdrawals, and downwardly revised production outlooks collectively supports the recent surge in natural gas prices. Market participants monitoring natural gas price today should recognize that the fundamental backdrop remains constructive for continued strength, barring a sudden and sustained warming trend.