U.S. natural gas prices staged a powerful rally late in January, surprising many given that inventories remain above the five-year average. A combination of extreme cold, temporary supply disruptions, and shifting trader psychology pushed prices sharply higher.
At this time, investors may want to keep an eye on natural gas-focused names such as The Williams Companies WMB, Expand Energy EXE and Comstock Resources CRK, which tend to benefit from periods of tighter market conditions.
Market Recap of the Late January Rally
Natural gas prices posted sharp gains toward the end of January. The March Henry Hub contract surged by double digits in the final session, finishing the month around the mid-$4 per million British thermal units range. Prices climbed rapidly since falling to three-month lows earlier in the month as winter demand concerns intensified, with daily gains exceeding 10% at one point. For the second half of January, natural gas logged a sizable gain as traders reacted to colder weather forecasts, freeze-related supply losses, and renewed volatility after a relatively calm start to the year.
Cold Weather Sensitivity and Marginal Supply Balance
Weather once again proved to be the dominant driver. Forecasts for sub-normal temperatures in early February across the Upper Midwest, Mid-Atlantic, and Northeast shifted sentiment quickly. In winter, even modest changes in temperature expectations can have an outsized impact on demand for heating and power generation. With the market finely balanced, worries that colder weather could last longer than expected were enough to push near-term prices higher, even though overall storage levels still appeared adequate.
Storage Withdrawals Versus Market Psychology
The latest storage data reinforced bullish sentiment. Working gas in storage fell by 242 billion cubic feet (Bcf) for the week ended Jan. 23, a draw that exceeded market expectations and came in well above the typical five-year average withdrawal. While inventories remain 143 Bcf above the five-year norm, traders focused more on the pace of withdrawals than the absolute level. The faster-than-normal draw signaled how quickly surplus supplies can erode when demand spikes, reinforcing concerns about late-winter tightness.
Freeze-Offs and Short-Term Production Disruptions
Supply disruptions added fuel to the rally. Late-January freeze-offs temporarily shut in production across key regions, reducing deliverability even as overall output levels remained historically high. These short-term losses mattered because gas markets depend on continuous flow. Even temporary wellhead, pipeline, or processing disruptions can have an immediate pricing impact when demand is surging, outweighing broader production trends in the near term.
What the Market is Watching Next
Looking ahead, attention turns to the Feb. 5 storage report, updated weather models, and the pace at which production recovers as temperatures moderate. If withdrawals remain elevated and cold lingers, prices could stay supported in the near term. While volatility is likely to remain high, the recent rally highlights how quickly sentiment can flip in winter markets. For investors, maintaining exposure to quality natural gas-linked companies such as The Williams Companies, Expand Energy and Comstock Resources may offer a way to participate if fundamentals continue to firm.
3 Natural Gas Stocks to Focus On
The Williams Companies: U.S. natural gas demand is projected to grow significantly in the long term, and The Williams Companies seems to be well-positioned to capitalize on the same, owing to its impressive portfolio of large-scale value-creating projects. With its extensive network handling a third of the U.S. natural gas and significant expansion projects in the pipeline, Zacks Rank #3 (Hold), Williams is set to benefit from favorable industry dynamics and growth prospects. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for the company’s 2026 earnings per share indicates 9.4% year-over-year growth. Williams Companies’ expected EPS growth rate for three to five years is currently 18.6%, which compares favorably with the industry's growth rate of 9.4%.
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 2026 earnings per share indicates a 29.5% year-over-year improvement. The firm has a trailing four-quarter earnings surprise of roughly 4.9%, on average.
Comstock Resources: It is an independent natural gas producer based in Frisco, TX, with operations concentrated in north Louisiana and East Texas. Comstock Resources — currently carrying a Zacks Rank of 3 — is fully focused on developing the Haynesville and Bossier shales, two of the largest gas plays in the United States.
CRK holds a large acreage position across the Haynesville, giving it direct exposure to Gulf Coast LNG demand growth. Its production is 100% natural gas, making it one of the most gas-levered E&Ps in the sector. The Zacks Consensus Estimate for Comstock Resources’ 2026 earnings per share indicates a 25% year-over-year surge. The firm has a trailing four-quarter earnings surprise of roughly 220.5%, on average.
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Williams Companies, Inc. (The) (WMB): Free Stock Analysis Report Comstock Resources, Inc. (CRK): Free Stock Analysis Report Expand Energy Corporation (EXE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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