SynMax Research:
Our January 9th report, “The Narrowing Cone: Why the March Storage Outlook Remains Expansive,” served as a critical counter-narrative to a complacent market, warning forecasters not to give up on winter too soon. The premise was clear: the potential for extreme cold remained a latent risk that could tighten end-of-season storage significantly faster than consensus expectations.
For those who acted on this analysis, the timing was impeccable. While we acknowledged the potential for volatility, the market realization was swift. February Henry Hub futures have surged from the low $3s to $5.65 before retreating to below $5/MMBtu and then quickly returning to roughly $5.25/MMBtu in less than two weeks. This move validates our earlier warning: when storage buffers erode, price response is non-linear.
Integrating the latest 15-day Euro ensemble forecast, our projected end-of-January storage level has tightened to 2,430 Bcf, with a current March 2026 projection of 1,614 Bcf. This estimation includes approximately 60-65 bcf of supply disruptions due to the intense weather.
This updated estimation is notably lower than our January 9 base case. The catalyst is the Euro ensemble's shift this week, which drops polar air into the Lower 48, adding significant heating-related demand. This underscores the asymmetric impact of weather, particularly given the residential and commercial demand sensitivity referenced in the recent SynMax research report.
End-of-March storage levels typically have significant market pricing implications, making these projections a key fundamental factor for most market participants. Since 2010, the end-of-March EIA working gas storage level has varied from a low of 837 Bcf in 2014 to a high of 2,473 Bcf in 2012.
Applying historical weekly storage changes to current levels, 3,065 bcf as of January 16, provides a look at the potential range:
However, these levels using actual changes are from the current 3,065 Bcf and do not reflect the significant withdrawals now predicted.
Another approach involves examining previous monthly changes. On the bullish side - admittedly a low-probability scenario - if the maximum February and March withdrawals were matched (the 780 Bcf withdrawal from February 2021 combined with the 381 Bcf withdrawal from March 2013), March 2026 storage would drop to 1,269 Bcf. On the bearish side, combining the February 2024 withdrawal of 260 Bcf with the March 2025 injection of 49 Bcf would leave storage at 2,219 Bcf, which would be the 4th highest on record since 2010, A more moderate approach examines the combined February/March change: the 2014 record withdrawal of 1,082 Bcf would result in 1,348 Bcf, while the record low withdrawal from 2024 would leave storage at 2,127 Bcf.
The other fundamental factors mentioned in the previous report have not changed and again reinforce the impact of weather on natural gas fundamentals and storage levels.