Why Natural Gas Prices Are Slipping Despite Strong LNG Demand
The natural gas market opened 2026 with a soft start, as near-term fundamentals outweighed the structurally strong demand for liquefied natural gas (LNG). Warmer weather forecasts, lighter-than-expected storage withdrawals, and strong U.S. production put pressure on prices early in the year.
Investors might want to monitor natural gas-focused stocks like EQT Corporation, Expand Energy, and Coterra Energy, which are closely tied to longer-term supply and demand dynamics rather than short-term weather fluctuations.
Weekly Price Action: Weather Takes Center Stage
Natural gas futures experienced a weekly loss as traders reassessed winter heating demand. The benchmark U.S. contract settled at $3.618 per million British thermal units, lower for the week after failing to hold an early spike above $4. Warmer-than-normal forecasts for mid-January reduced expected heating demand across large parts of the Lower 48. Simultaneously, the latest storage withdrawal of 38 billion cubic feet came in well below expectations, indicating a looser supply-demand balance. Elevated U.S. production levels further capped upside, even as LNG export flows remained historically strong throughout December.
Why LNG Strength Isn't Lifting Prices Yet
U.S. LNG exports continue to set record highs, providing a crucial outlet for domestic supply. Average feedgas flows to major export terminals reached new peaks in December, highlighting the growth in overseas demand for U.S. gas. However, the market remains heavily focused on short-term weather trends during the core winter season. Mild forecasts can quickly outweigh export strength, especially when production is at record levels. As a result, LNG demand has helped limit deeper declines but has not been sufficient to push prices higher amid softer near-term fundamentals.
What Investors Should Focus On Next
For investors, the near-term outlook for natural gas remains tied to a steady flow of new data rather than day-to-day price movements. Updated weather forecasts and upcoming storage reports will shape expectations around winter demand. A turn toward colder conditions later in January could tighten supply balances, while extended warmth would keep withdrawals modest. This uncertainty explains recent volatility, but it does not alter the longer-term demand picture.
Looking beyond the short term, the setup remains constructive for investors with patience. Growing LNG export capacity provides a stable source of demand, and winter still has time to deliver stronger cold-driven draws. Periods of weather-related weakness can create entry points, especially in companies with scale and efficient operations. Names like EQT, Expand Energy, and Coterra Energy remain well-positioned to benefit as fundamentals improve over time.
3 Stocks to Focus On
EQT: EQT is the premier natural gas producer in the domestic market based on average daily sales volumes. With a primary emphasis on the Appalachian Basin, spanning Ohio, Pennsylvania, and West Virginia, the company's share of natural gas in its overall production/sales is more than 90%.
EQT has consistently beaten the Zacks Consensus Estimate for earnings in each of the last four quarters. The Zacks Rank #3 (Hold) natural gas producer has a trailing four-quarter earnings surprise of roughly 16.7%, on average.
Expand Energy: Expand Energy has solidified itself as the largest natural gas producer in the United States, following the Chesapeake-Southwestern merger. With key assets in the Haynesville and Marcellus basins, Zacks #3-ranked EXE is well-positioned to capitalize on the increasing demand for natural gas, driven by LNG exports, AI/data centers, EV expansion, and broader electrification trends.
The Zacks Consensus Estimate for Expand Energy's 2025 earnings per share indicates a 317.7% year-over-year surge. The firm has a trailing four-quarter earnings surprise of roughly 4.9%, on average.
Coterra Energy: Coterra is an independent upstream operator primarily engaged in the exploration, development, and production of natural gas. Headquartered in Houston, TX, the firm owns approximately 186,000 net acres in the gas-producing Marcellus Shale of the Appalachian Basin. The company's share of natural gas in its overall production is more than 60%.
Coterra's expected earnings per share growth rate for three to five years is currently 27.8%, which compares favorably with the industry's growth rate of 17.2%. Valued at over $20 billion, Coterra Energy, currently carrying a Zacks Rank of 3, has a trailing four-quarter earnings surprise of roughly 6.6%, on average.
Research Chief Names 'Single Best Pick to Double'
From thousands of stocks, 5 Zacks experts have chosen their favorite to skyrocket by over 100% in the coming months. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. While all elite picks aren't winners, this one could far surpass earlier Zacks' Stocks Set to Double, like Nano-X Imaging, which shot up +129.6% in little more than 9 months.
For more information, visit Zacks Investment Research (zacks.com).
