US natural gas prices rebound 70% on winter cold, Europe follows suit

After hitting nearly 3-year highs above $5/MMBtu in early December, US natural gas prices erased gains again, steadily nearing the $3/MMBtu threshold. However, the cold blast rattled the markets this past week, creating a surge in heating demand and supply risks. This sent Henry Hub prices to and above $5/MMBtu, up by 70% from a week earlier.

Meanwhile, the European TFF Dutch market - which was hovering around nearly 2-year lows of $8/MMBtu and narrowing the gap with Henry Hub to the lowest since 2021 - also gained more than 40% in the past weeks, reflecting cold-driven consumption and lingering LNG dependency. The weekly average reached above $11/MMBtu while Friday’s settlement even neared the $12/MMBtu threshold.

US winter storm flips Henry Hub sentiment, pushing prices back to 3-year highs

In the US, forecasts calling for sustained sub-freezing temperatures across large parts of the Central and Eastern regions have reshaped market expectations for early 2026. Heating demand is now projected to exceed the five-year average by a wide margin, prompting a sharp reassessment of storage and price outlooks.

Following the early December rebound that sent prices to 3-year high, Henry Hub prices fell steadily through December amid strong production and mild weather, but reversed course sharply after mid-January. Prices climbed rapidly - nearly by 50% as the weekly average prices suggest at ChemOrbis Price Wizard, since winter storm forecasts materialised, marking a clear break from the prior bearish trend.

The jump is more obvious on a daily basis, as January 23 Friday’s settlement at $5.275/MMBtu displays a surge of 70% from the previous Friday. Amidst this recent freeze, the US market is likely to hit its highest again since November-December 2022, when record low temperatures across large swaths of the Midwest and Northeast pushed prices up to $6-7/MMBtu thresholds following the earlier imbalance created by the Russia-Ukraine conflict.

NYMEX futures have also risen for a third consecutive session, with the front of the curve seeing the most pronounced moves. The rally reflects growing concern over near-term supply-demand tightness rather than longer-term fundamentals, according to market participants.

Demand surge and freeze-off risks tighten US balances

The severe freeze, especially in southern gas-producing regions, has raised concerns about ice forming in pipelines, which could disrupt production and exports.

The shift in weather expectations has also dramatically altered demand projections. Residential and commercial gas consumption is now set to surge through the end of January, with peak demand expected to far exceed seasonal norms.

Storage data showed inventories fell 120 billion cubic feet to 3.065 trillion cubic feet last week, a larger draw than expected but still leaving stockpiles about 6.1% above the five-year average. Analysts expect the next report to show an even larger withdrawal as frigid conditions boost heating demand and increase pressure on available supply.

Europe rebounds from 20-month lows as LNG exposure keeps prices sensitive

European gas prices have also rebounded since early January. Indeed, the Dutch TTF benchmark was largely on a bearish note in the second half of 2025 given abundant LNG imports from the US. Prices hit their lowest level since April 2024 in December, while the spread between Dutch TTF and Henry Hub had also narrowed to around $3-4, the lowest since 2021. This spread stood at $13 at the beginning of 2025 and as high as $90 at the height of the Russia-Ukraine crisis in August 2022.

Unlike the US, Europe’s market remains structurally exposed to global LNG flows as US cargoes made up around 56% of Europe’s LNG imports in 2025 in the absence of Russia. Lower storage buffers and uncertainty around LNG availability have kept risk premiums elevated, leaving prices sensitive to developments in the US and global gas markets.

Thus, the rally started a week earlier in Europe as the winter storm directly found a reflection on the exports from the US. With Friday’s TTF settlement on January 23 nearing the $12/MMBtu threshold, the spread with Henry Hub has grown back to $7/MMBtu.

Any tightening in US balances or weather-driven volatility at Henry Hub could limit LNG flexibility, adding upward pressure to European benchmarks at a time when industrial consumers remain highly cost-sensitive.

What is ahead?

Analysts note that questions remain over whether the rally can be sustained once weather risks ease.

The weather remains the dominant short-term driver, since colder winter temperatures lead to more demand for natural gas, both directly for space heating and indirectly because natural gas is also the most prevalent source of electricity generation. The hype is likely to be over when concerns over both production and consumption subside, as was the case in previous years.

The 2025 average Henry Hub natural gas spot price at $3.52/MMBtu increased 56% from the 2024 annual average, which—when adjusted for inflation—was the lowest on record, according to EIA (Energy Information Administration).

As for 2026 and 2027, EIA still foresees that natural gas prices may continue to rise on a yearly average, which may reflect on electricity prices as well as ethane and ethylene prices in the longer run.