The Natural Gas Puzzle: Why Robust LNG Demand Hasn't Stabilized Domestic Prices

The beginning of 2026 presents a curious disconnect in the natural gas market. While liquefied natural gas exports hit record levels and global demand remains exceptionally strong, the price of natural gas per mcf today reflects a different story—one dominated by near-term supply pressures rather than longer-term export fundamentals. This misalignment between what’s happening in the LNG sector and what traders see in the spot market creates both challenges and opportunities for investors tracking this space.

The Current Market Narrative: Mild Weather Trumps Export Strength

Recent price action tells a compelling story. The U.S. natural gas benchmark closed Friday’s session at $3.618 per million British thermal units, marking a weekly decline despite the structural strength in overseas demand. The culprit? A combination of three factors that have overwhelmed bullish signals from the LNG export boom.

Forecasters are calling for above-normal temperatures across much of the Lower 48 states in mid-January, reducing the heating demand that typically supports prices during winter months. Simultaneously, storage withdrawal data came in surprisingly light at 38 billion cubic feet—well below what the market had anticipated. This suggests the supply-demand balance has loosened considerably. On top of these near-term headwinds, domestic production remains elevated at record-setting levels, capping any potential price recovery even as export terminals ship gas at historically unprecedented rates.

The result is a market caught between two competing narratives: short-term seasonal weakness versus long-term structural support from growing LNG exports.

Why LNG Exports Aren’t Enough (Yet)

The paradox deepens when examining LNG fundamentals. U.S. export terminals received record feedgas volumes in December, with average flows reaching new peaks. This reflects genuine strength in global demand, particularly as international customers seek reliable supplies. The infrastructure now exists to absorb and monetize large volumes of domestic natural gas.

However, the market’s myopia during winter months creates an interesting dynamic. LNG export demand, while substantial and growing, cannot immediately offset the gravitational pull of mild weather and loose storage conditions. Traders focus intensely on heating-season dynamics, meaning short-term weather patterns carry disproportionate weight. LNG strength has functioned as a floor—limiting deeper declines—but hasn’t proven sufficient to reverse the downward price trajectory when production surges and winter demand disappoints.

The question for investors: When does the seasonal fog lift enough to reveal the underlying structural support from LNG?

Identifying Positioning Opportunities in Producer Stocks

For those willing to look past current price weakness, the natural gas-producing sector offers names with strong fundamentals. EQT Corporation stands as the largest pure-play natural gas producer by domestic sales volume, with over 90% of its output mix coming from the Appalachian Basin spanning Ohio, Pennsylvania, and West Virginia. The company has exceeded earnings expectations in each of the last four consecutive quarters, posting an average earnings surprise of 16.7%, and carries a Zacks Rank of 3.

Expand Energy, formed following the Chesapeake-Southwestern combination, now holds the title of largest U.S. natural gas producer overall. Its asset base in the Haynesville and Marcellus formations positions it advantageously as demand grows from LNG export growth, artificial intelligence infrastructure expansion, electric vehicle proliferation, and electrification initiatives. The consensus estimate for Expand Energy’s 2025 earnings per share projects a 317.7% year-over-year increase, though the company’s average quarterly earnings surprise runs at 4.9%.

Coterra Energy, an independent operator headquartered in Houston, focuses on exploration and development in the Marcellus Shale formation within the Appalachian Basin. The firm controls approximately 186,000 net acres with natural gas comprising more than 60% of total production. Its three-to-five-year expected earnings growth rate of 27.8% exceeds the broader industry average of 17.2%, and the company (valued near $20 billion) maintains a Zacks Rank of 3 with an average four-quarter earnings surprise of 6.6%.

What Comes Next: Data Dependency and Long-Term Positioning

Near-term price movements will remain tethered to incoming weather forecasts and weekly storage reports. A sustained shift toward colder conditions later in January could tighten the supply-demand balance and spark a reversal. Conversely, extended warmth would keep inventory withdrawals subdued and pressure prices further.

Yet this volatility masks a constructive longer-term setup. The combination of growing LNG export infrastructure and persistent global demand creates a foundation for sustained producer economics. Investors with patience may find weather-driven weakness in quality producers with scale and operational efficiency to be attractive entry opportunities. The price of natural gas per mcf today may not reflect tomorrow’s fundamental reality, particularly as winter demand potentially strengthens and LNG export momentum continues.

For equity investors, the strategic approach involves positioning in operators that can weather near-term price volatility while capturing the benefits of structural LNG demand growth—exactly the profile that EQT, Expand Energy, and Coterra Energy represent.