US natural gas prices have surged, with the Henry Hub price exceeding $6/MMBtu. This is the highest level since late 2022, prompted by a winter storm affecting nearly half of US states, leading to increased heating demand.
Despite these demand concerns, US gas storage remains stable. As of 16 January, storage data from the EIA reveals a 4.8% rise year-on-year, 6.1% above the five-year average.
Speculative short positions in the US gas market have contributed to the price movement over the past week. As of last Tuesday, speculators held a net short of 77,014 lots in Henry Hub.
We are seeing natural gas prices surge past $6/MMBtu, a level not seen since late 2022, as a severe winter storm grips the nation. The extreme cold has not only boosted heating demand but has also caused production issues, with reports of well freeze-offs temporarily cutting supply by an estimated 10 Bcf/d. This combination of higher demand and lower supply is driving the immediate, sharp rally.
This situation is a stark reversal from just a few weeks ago, when the market was very comfortable. Coming into this storm, gas storage was over 6% above the five-year average, a surplus built during the relatively mild winter we experienced in 2025. Those high inventory levels suggest the market’s underlying fundamentals are not as tight as the current price indicates.
The price move is being amplified by a significant short squeeze, as many traders were betting on prices to fall. The latest data showed a large net short position, and those traders are now being forced to buy back their contracts to cover their losses, pushing prices even higher. The upcoming EIA storage report will be critical, with many expecting a record-breaking withdrawal of over 300 Bcf, which will keep short-term bullish pressure on the market.
For the coming weeks, we should consider this spike as likely being temporary and driven by short-term weather and positioning. Once the storm passes and production returns to normal, the comfortable storage levels should put downward pressure on prices again. Derivative traders could look at buying put options for March or April delivery to position for a potential price correction once this weather event subsides.
We saw a similar pattern during the winter of 2022, when a weather-driven spike eventually gave way to a significant price decline once milder temperatures returned. That historical precedent suggests that selling into this strength, or establishing bearish positions for later in the spring, could be a viable strategy. The key will be to time the entry for when the current storm’s impact begins to fade from the forecast.
