Why Natural Gas Prices Are Slipping Despite Strong LNG Demand

Natural gas prices opened 2026 on a softer footing as near-term fundamentals outweighed structurally strong liquefied natural gas (“LNG”) demand. Warmer weather forecasts, lighter-than-expected storage withdrawals and strong U.S. production combined to pressure prices early in the year.

At this time, investors may want to keep an eye on natural gas-focused stocks such as EQT Corporation EQT, Expand Energy EXE and Coterra Energy CTRA, which remain closely tied to longer-term supply and demand dynamics rather than short-term weather swings.

Weekly Price Action: Weather Takes the Lead

Natural gas futures posted a weekly loss as traders reassessed winter heating demand. The benchmark U.S. contract settled Friday 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. At the same time, the latest storage withdrawal of 38 billion cubic feet came in well below expectations, signaling 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 run near record highs, providing an essential outlet for domestic supply. Average feedgas flows to major export terminals reached new peaks in December, underscoring 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, particularly when production is running at record levels. As a result, LNG demand has helped limit deeper declines but has not been enough 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 moves. 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 such as 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 beat 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. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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: It is an independent upstream operator primarily engaged in the exploration, development and production of natural gas. Headquartered in Houston, TX, the firm owns some 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.

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This article originally published on Zacks Investment Research (zacks.com).

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