Milder Weather Gives Gas Sector a Break

---

Written by Daniel Graeber for IIR Energy Intelligence (Sugar Land, Texas)

---

Summary

Demand for natural gas for heating is on the decline as North American temperatures return to seasonal norms. But the impact from recent winter weather caused an upward revision in wholesale natural gas prices.

---

Dusting off From Fern

The U.S. natural gas sector is back to relative normalcy after Winter Storm Fern, data show, though the demand draw prompted the federal government to raise its forecast for Henry Hub.

"Milder weather patterns continue to weigh on consumption, particularly within heating-driven residential and commercial demand, contributing to the slight decline in total U.S. demand to the 127--128 billion cubic feet per day range," Maria Sanchez, a senior natural gas analyst at IIR Energy, wrote in a Wednesday report.

Subscribers to Industrial Info's Global Market Intelligence (GMI) databases have access to the NATGAS Today report from Wednesday.

North America has finally dusted off from the latest round of severe winter weather. Winter Storm Fern drove natural gas demand higher, with levels not seen since Winter Storm Elliot left some 1.5 million people without power in 2022.

The PJM Interconnection, a regional transmission organization that provides power to customers in all or parts of 13 eastern U.S. states and the District of Columbia, had warned that demand could be at an all-time high at about 144,450 megawatts (MW) during the worst of the storm.

There were few mechanical issues in the energy sector stemming from the weather, though some pipelines saw volumes curtailed. On February 5, the U.S. Energy Information Administration (EIA) reported a record U.S. natural gas storage withdrawal, driven by Winter Storm Fern and its simultaneous impact on both supply and demand.

EIA reported working natural gas stocks declined 360 billion cubic feet during the week ending January 30, besting the five-week average for that week by 89%.

Apart from some inclement weather in areas near Maine, much of the continental United States was witnessing normal to above-normal temperatures for the second week of February. It was flirting with 80 degrees Fahrenheit on the Texas coast on Wednesday, while St. Paul, Minnesota, was expecting highs around 30. Some northern states could see 50 degrees by the weekend, curtailing home-heating demand.

Imports are down as well. Canada, a net natural gas exporter to the U.S. economy, sent a record 10.69 billion cubic feet (Bcf) of natural gas across its southern border on January 24. By Wednesday, those levels were closer to 5.2 Bcf.

Elsewhere, exports of liquefied natural gas (LNG) remain robust. The amount of feed gas running to export terminals was around 18.8 Bcf on Wednesday, some 14% above government expectations. Previous, unspecified issues at the Cove Point and Elba Island facilities appear to be resolved.

Subscribers to the GMI Plant Database have access to both the Cove Point and Elba Island plant profiles.

Natural Gas Market Prices Revised Higher

While severe winter weather is over for now, the impacts are still resonating across the market. In its monthly market report for February, EIA said it revised its forecast for natural gas prices higher because of the demand pull from Fern.

"Looking ahead, the large storage withdrawals in late January mean we now expect the United States will end the withdrawal season in March with less natural gas in storage than we previously expected," analysts wrote. "Less natural gas in storage led us to raise our forecast for prices for much of this year."

Henry Hub, the U.S. benchmark for the price of natural gas, was trading at around $3.10 per million British thermal units (MMBtu) early Wednesday morning, down around 1% from the previous session. EIA, however, expects Henry Hub to average $4.31 per MMBtu this year, a 22% increase from last year's average and 24.6% above EIA's estimate from January.

EIA, however, said the higher price for natural gas could incentivize more drilling. Its own data, however, point to a modest decline in production. Compared to 2025 levels, the expected average of 118 Bcf/d from the Lower 48 states would mark a 2.2% annual increase should the forecast prove accurate. Production to 2027 expands by 1.4% to 119.7 Bcf/d.

By the Numbers

• $4.31 per MMBtu expected for Henry Hub
• 80 degrees for Texas is a marked turnaround from January
• 5.2 Bcf from Canada is more than 50% below recent peaks

Key Takeaways

• A break from winter weather gives gas sector a breather.
• Demand surge pushed forecast for Henry Hub higher.
• LNG sector running at above average.

---

About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).