U.S. Natural Gas Storage Drops 119 Bcf as Prices Rebound and LNG Exports Hit Record Highs

U.S. natural gas markets tightened in early January as storage withdrawals accelerated and futures prices rebounded sharply from recent lows. The latest Weekly Natural Gas Storage Report for the week ending January 2, 2026, shows inventories declining faster than seasonal norms, while shifting weather forecasts, lower production, and record LNG exports reshaped price expectations across the energy complex.

Working gas in underground storage across the Lower 48 states stood at 3,256 billion cubic feet as of January 2. That level reflects a net withdrawal of 119 Bcf from the prior week, placing total inventories 123 Bcf below the same period last year but still 31 Bcf above the five-year average of 3,225 Bcf. While stocks remain within the historical range, the pace of withdrawals signaled stronger near-term demand and reduced supply flexibility compared with late December.

Regionally, storage declines were broad-based. The largest draw occurred in the Midwest, where inventories fell by 44 Bcf to 821 Bcf, leaving stocks more than seven percent below both last year and the five-year average. The East followed closely with a 39 Bcf withdrawal, pushing inventories to 697 Bcf and further widening deficits versus historical benchmarks. South Central stocks dropped by 25 Bcf to 1,178 Bcf, with nonsalt facilities accounting for most of the decline, while salt cavern volumes remained unchanged. Smaller but notable withdrawals were recorded in the Mountain and Pacific regions, underscoring a nationwide pull on supplies as winter progressed.

This tightening backdrop helped propel U.S. natural gas futures higher. Prices climbed to around $3.50 per MMBtu, rebounding from a ten-week low near $3.35 earlier in the week. The rally reflected a combination of reduced output, cooler temperature revisions, and renewed confidence in demand growth, particularly from export channels.

Production trends added further support to prices. Average dry gas output in the Lower 48 slipped to approximately 109.0 billion cubic feet per day in early January, down from December’s record average of 109.7 bcfd. Daily production briefly dipped toward a three-week low near 108.1 bcfd as declines in Arkansas and Texas offset gains elsewhere. Although the pullback remains modest by historical standards, it marked a clear shift from the relentless growth that defined much of 2025.

Weather forecasts also played a critical role in shaping market sentiment. While updated outlooks pointed to slightly cooler conditions and higher heating demand than previously expected, temperatures through January 22 are still projected to remain mostly warmer than normal across much of the United States. As a result, residential and commercial gas consumption is likely to stay below typical mid-winter levels, limiting the upside risk to storage draws despite the recent cold snaps.

LNG exports continue to be a major source of demand and a stabilizing force for domestic prices. Flows to the eight largest U.S. LNG export facilities averaged 18.6 bcfd, exceeding December’s record of 18.5 bcfd. This sustained strength highlights the growing role of the United States as a global supplier and keeps domestic balances tighter than they would otherwise be during periods of mild weather.

International dynamics added another layer of complexity. Global natural gas prices have eased to multi-month lows amid optimism that progress in Ukraine peace talks could eventually lead to relaxed sanctions on Russia. Any increase in future Russian gas exports would have significant implications for global supply, potentially tempering international prices and influencing U.S. LNG competitiveness over the medium term.

Taken together, the latest storage data, production slowdown, and export strength suggest a market that is more balanced than headline inventory levels alone might imply. While U.S. natural gas storage remains slightly above the five-year average, the recent withdrawal pace and shifting fundamentals point to heightened sensitivity to weather changes and geopolitical developments as winter continues.