The energy world is acting a little strange right now. If you look at the headlines, it’s a mess of "record cold" and "falling prices." Honestly, it’s enough to give anyone whiplash. We’ve spent the last few years terrified of shortages, but as we move deeper into January 2026, the conversation has shifted. It’s not about if we have enough gas anymore; it's about where we're going to put it all.
Gas is cheap. Well, relatively.
Yesterday, February futures for natural gas were hanging out right around the $3.10 mark at the Henry Hub. That’s a massive drop—nearly 30%—from where things stood just back in December. You’ve got this weird tug-of-war happening. On one side, there’s a massive cold snap hitting the Central and Eastern U.S. through January 24th. Normally, that would send prices to the moon. But this time? The market basically shrugged.
Why? Because the tanks are full.
The $3.00 Floor and Why the Surplus is Winning
We are currently sitting on an inventory surplus that is about 3.4% above the five-year average. In the world of commodities, that’s a pretty big cushion. It acts like a wet blanket on any price rallies. James Hyerczyk, a technical analyst who has been watching these charts for years, recently noted that $3.00 is the psychological line in the sand. If it breaks below that, we could see $2.70 real fast.
It’s a buyer's market, mostly.
But don't get too comfortable. The Energy Information Administration (EIA) just dropped their January Short-Term Energy Outlook, and they’re predicting a bit of a rollercoaster. They expect prices to stay relatively chill through 2026, averaging just under $3.50. But then, 2027 hits. And they think prices will spike by 33% to nearly $4.60.
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The reason? We’re building export terminals faster than we’re drilling new wells.
What’s happening with the LNG "Wave"?
You might have heard about the "LNG wave." It’s basically a massive surge of Liquefied Natural Gas export capacity coming online.
- Plaquemines LNG is ramping up.
- Corpus Christi Stage 3 is doing the same.
- Golden Pass LNG is finally expected to start breathing in mid-2026 after a bunch of delays.
Once these things are fully open, they suck up huge amounts of domestic gas and ship it to Europe and Asia. Right now, supply is keeping up. In 2027, the EIA thinks demand will finally outrun supply by about 1.6 billion cubic feet per day. That’s when your heating bill starts looking scary again.
Europe is Under the Grip of Cold—and It’s Tense
Across the pond, things are a bit more dramatic. Europe’s gas storage levels just dipped below the 60% threshold earlier this month. For context, last year they didn’t hit that low until the very end of January.
It’s cold. Really cold.
On January 14th, Europe actually set a record for the highest daily LNG import in history—486 million cubic meters in a single day. They are panic-buying to keep the lights on while they drain their underground caves. Norway is still the MVP here, supplying about 30% of their total gas, but the U.S. is right behind them, providing nearly 60% of their LNG.
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There is a massive geopolitical poker game happening too. The Trump administration has been leaning on the EU to buy more American gas—like, $750 billion worth. It’s part of a trade deal meant to replace Russian volumes for good. But there’s a catch: the EU has these strict new methane regulations and a Carbon Border Adjustment Mechanism (CBAM) starting its "definitive regime" on January 1, 2026.
Essentially, the EU wants the gas, but they want it "green." The U.S. wants to sell the gas, but doesn't want the red tape. Something has to give.
The Data Center Factor
Here is something most people aren't talking about: AI.
Every time you ask an AI to write a poem or analyze a spreadsheet, a data center somewhere hums a little louder. Those centers need power, and they need it 24/7. Renewables are great, but they don't always blow or shine when ChatGPT is busy.
In the U.S., we are seeing a "building spree" of gas-fired power plants specifically to feed these AI hubs. GE Vernova and Siemens Energy are actually ramping up turbine production by 30-60% just to keep up. It turns out the "digital future" is still very much fueled by a physical blue flame.
What Most People Get Wrong About Gas Prices
Usually, people think "Production up = Prices down."
It's not that simple. In the Permian Basin, producers are actually making too much gas. It’s a byproduct of drilling for oil. Sometimes, the price at the Waha hub in West Texas goes negative. Yes, they literally pay people to take the gas away because they don't have enough pipes to move it to the coast.
Relief is coming, but not until late 2026 when new pipelines finally open up. Until then, we have this weird situation where gas is trapped in Texas while Europe is paying a premium for it.
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News on Natural Gas: The Bottom Line for Your Wallet
If you’re a homeowner or a small business owner, here is the deal. 2026 looks like a "breather" year. The supply is there, the storage is healthy, and the massive export-driven price spikes haven't fully kicked in yet.
However, the "cheap gas" era has an expiration date. Once those three major LNG terminals are fully operational by the end of this year, the U.S. market becomes much more tightly linked to global prices. If there’s a crisis in the Middle East or a freezing winter in Tokyo, you’ll feel it in Ohio.
What you should actually do:
- Lock in fixed rates now: if you’re in a deregulated market, 2026 is likely the best window you'll get to sign a multi-year fixed contract before the 2027 projected spike.
- Watch the $3.00 mark: if you trade or manage energy costs for a business, use that $3.00 Henry Hub level as your trigger. If we stay below it, stay patient. If it holds through February, the "bear" is in control.
- Efficiency still wins: with the EU's CBAM and U.S. policy shifts, the "cost of carbon" is going to start leaking into gas prices eventually. Insulation is a better investment than ever.
The market is quiet right now, but it’s the kind of quiet that happens right before a big shift. Don't let the low prices today fool you into thinking the volatility is gone for good.
Stay informed by tracking the weekly EIA storage reports every Thursday; they are the most honest look at the balance of the market you'll find.