US natural gas futures have fallen ~27% in 2026, as warmer weather, ample storage and weak demand weigh on prices. The year began with a brief spike during an extreme cold snap, but prices quickly retreated as temperatures moderated. The broader trend has been driven by a persistent warm-weather outlook, with forecasts of above-average temperatures reducing heating demand in winter and cooling demand in summer. Last week, prices fell more than 15%, their biggest weekly decline since February, as warmer conditions are forecast to persist across much of the US through November.
- Short only Natural Gas Futures are at their highest in well over a decade as the commodity continues to plumb multi-year lows – a demonstration that investing against professional traders can be risky.
Bearish fundamentals have encouraged the aggressive speculative selling. Hedge funds held a record net short position across seven Henry Hub benchmarks according to the cited CFTC data, while trend-following funds amplified the latest decline. The US Energy Information Administration had already cut its 2026 average Henry Hub price forecast by 14% to US$3.46/MMBtu in January, citing the warmer outlook, but current prices are well below that estimate.
- We could not consider catching the natural gas “falling knife”, which is too weather-dependent for our liking.
