Locator: 49802B.
Quote of the day: "It's AMD's day today (after Intel's conference call yesterday)" -- Jim Cramer.
CSX: up 3% in pre-market trading; Cramer says BNSF will tie up with CSX. Berkshire Hathaway's new CEO needs a win. Desperately.
BRK-B: pre-market, down again. Down half-a-percent in pre-market; could open well below $485. Its 52-week high is 542. BRK-B is down 12% from its 52-week high. Ouch. The GOAT.
Cramer: watch Gaza. A lot of money could pour into Gaza. Dubai has a lot of money. So many story lines. Could this be a Trump legacy? Board of Peace. This could be so big it could rival the UN. Reuters headline. Talk about a loaded / prejudicial headline: why would Reuters be concerned about a Trump initiative rivaling the UN? Oh, that's right.
Exhibit A: What country currently runs the UN Security Council?
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Back to the Bakken
WTI: $60.81. Up 2.44% overnight; up $1.45. Geo-political or weather?
New wells reporting:
- Sunday, January 25, 2026: 41 for the month, 41 for the quarter, 41 for the year,
- 41384, conf, Hess, GN-Stundal-158-97-1819H-3,
- 41351, conf, Hess, GO-Dustin Brose-156-98-2932H-4,
- Saturday, January 24, 2026: 39 for the month, 39 for the quarter, 39 for the year,
- 41308, conf, BR, Sandie 3A MBH,
- 40079, conf, Devon, Cuda 14-26F 5H,
- Friday, January 23, 2026: 37 for the month, 37 for the quarter, 37 for the year,
- 40078, conf, Devon, Cuda 15-27F 4H,
- 39802, conf, BR, Carlsbad 4B,
- 36616, conf, BR, Sandie 2C-MBH,
RBN Energy: will the storm set to slam the south lead to a winter storm Uri reprise? Link here. Archived.
The natural gas market was roiled this week by the prospect of
severe winter weather set to sweep across the country. The placid first
half of January, with temperatures far above seasonal averages, now
looks set to turn downright frigid from Friday through Sunday. The
storm, now known as Winter Storm Fern, is forecast to leave a swath of
snow and ice across the middle of the U.S. from New Mexico to Delaware.
This has sent futures soaring this week and triggered market memories of
another storm with an even shorter name, Uri, that wreaked havoc on the
gas market five years ago. In today’s RBN blog, we’ll discuss the
market’s jump in advance of Fern’s arrival and whether its effects might
rival the tremendous dislocations caused by Uri.
The
natural gas futures market was still in the doldrums on Friday, January
16, when the front-month February contract settled at $3.103/MMBtu, 88
cents lower than where the contract was trading when it became the
prompt month at the end of December. Bearishness was the norm in the
first half of January due to the unseasonably warm weather. According to
data from RBN’s U.S. NATGAS Billboard,
the average national temperature was 47.2 degrees for the January 1-15
period, 4.3 degrees higher than the average for the prior 10 years. As
we would expect, unseasonably high temperatures for a peak winter month
led to lower-than-typical natural gas usage. Total U.S. demand for
natural gas in the first half of January averaged a paltry 101.7 Bcf/d.
(The same period in 2025 averaged 124.2 Bcf/d.) Only record-high LNG
feedgas kept supply from exceeding demand during those weeks, signaling a
very loose market for a period that normally sees high withdrawals from
storage.
As of January 16, the general view was that
the second half of January would be colder than the first half. At RBN,
we had anticipated that the average national temperature would be 2.9
degrees below normal for the back half of the month — cold, but not
enough to significantly alter the gas balance — and our forecasts showed
the gas surplus to the 5-year average declining by only 11 Bcf through
February 6 (left side of Figure 1 below). The gas market entered the
long Martin Luther King Day holiday weekend in a tranquil state but
forecast changes over those three days sent futures into a frenzy when
trading resumed.
When
the market returned from the holiday, the outlook for temperatures and
storage was turned on its head. The temperature-based storage forecast
in RBN’s U.S. NATGAS Billboard for the week ending January 30 went from a
214-Bcf withdrawal on Friday to a 326-Bcf withdrawal on Tuesday — a
whopping 112-Bcf change from the prior trading day. And the shift was
not confined to a single week, with the forecast for the storage week
ending February 6 becoming 41 Bcf larger. Our new projection was that
the storage surplus to the 5-year average would be wiped out by January
30 and move to a slight deficit on February 6. Market participants saw
similar changes afoot, setting off a buying spree in early trading on
Tuesday. By the end of the trading day, the February contract had gained 80.4 cents — a significant jump, but still below where it had traded when it took over as prompt.
Wednesday
morning brought even more bullish news. Weather forecasts for the last
week of January and the first week of February were revised in an
even-colder direction and RBN’s forecast for storage withdrawals during
those weeks grew by 33 Bcf and 29 Bcf, respectively. This new storage
forecast (right side of Figure 1 above) meant that storage would have a
32-Bcf deficit to the 5-year average by January 30, expanding to an
84-Bcf deficit by February 6. The market reacted even more strongly to
the cold predictions in the second trading day of the week with the
prompt contract rising by 96.8 cents
to $4.875/MMBtu. Tuesday and Wednesday together saw the front month rise
by 57%, the largest two-day increase (by percentage) in the history of
NYMEX gas trading. Thursday brought more of the same, with the
front-month breaching the $5/MMBtu mark as the forecast turned even more
bullish.
Winter Storm Fern’s effects are expected to
be widespread across much of the South and Midwest, with freezing rain
and snow likely in a belt across those regions. But as dangerous and
inconvenient as precipitation will be, temperatures will have a major
effect on the gas market. The National Weather Service’s latest forecast
for Monday’s lows (see Figure 2 below) predicts temperatures well below
freezing for much of the country.
Notably,
the forecast calls for freezing temperatures in all three of the
largest gas producing regions: Appalachia, the Permian and the
Haynesville. This could cause simultaneous freeze-offs in all the most
important gas-producing regions at a time when demand is at its peak. As
we wrote in Cold As Ice,
the winterization of wellheads is much more common in colder climates.
This means that freezing temperatures may have a significantly heavy
impact in the Haynesville, where winters are much milder than in the
Permian, Appalachia or the especially frigid Bakken. (Check out RBN’s
brand new NATGAS Haynesville report for the latest on Haynesville production and how it reacts to the upcoming storm.)
The
forecast in Figure 2 has some eerie similarities to the weather during
the depths of Winter Storm Uri. Figure 3 below, which covers the coldest
period of that storm, shows freezing temperatures across much of Texas
as well as the Plains and the Midwest. As we explained in East Is East, West Is West,
cash prices west of the Mississippi River (prices just to the left of
the dotted line) shot up tremendously on account of the cold for two
primary reasons: 1) To draw in enough gas supply to meet demand, and
when that was insufficient, and 2) To price out other competing demand.
In the South and in Texas in particular, major freeze-offs in the
Permian Basin led to shortages of gas and prices soared to the point
that big industrial users curtailed usage.
But
a major factor as to why the market got so out of joint in 2021 was the
tremendous decline in power production in Texas. As explained in RBN’s
#1 blog of 2021, Terminal Frost,
power outages on the Electric Reliability Council of Texas (ERCOT) grid
were a major factor in the production cratering. A power grid failure
in a production basin has numerous repercussions that ultimately result
in shut-in wells. Without a power source, all instrumentation and
measurement equipment shuts down. Producers can’t measure or manage
flows. And the gas produced during Winter Storm Uri faced further issues
downstream. Most pipelines operate their valves via electricity and
hydraulics. Frozen valves and a loss of power mean crews have to jump
through hoops to make it all work — manually. Numerous Texas pipelines
during Uri declared force majeure or had to institute operational flow
orders (OFOs),
which restrict the amount of fuel shippers can put on their systems.
This created a deficit of gas to serve electric generators, sending the
market into a vicious cycle where lower production begat lower
production.
However, there are strong reasons to
think that history will not repeat itself five years later. For one
thing, the expected area of extreme cold during Winter Storm Fern does
not cut quite as far south across Texas as it did during Winter Storm
Uri. In addition, Fern is expected to move eastward much more quickly
than Uri did. Even in North Texas, Dallas is expected to endure freezing
weather from Saturday through Monday, but highs are expected to reach
above freezing on Tuesday. In contrast, from February 10-18, 2021, the
temperature in Dallas/Fort Worth was consistently below freezing on
every day except one. The sustained deep freeze that exhausted storage
and led to equipment failures is likely to be much less severe this time
around.
Another reason why things are different this time is that changes have been made in Texas’s gas and power sectors (see Wind of Change).
Since the 2021 disaster, the Texas Railroad Commission created a
Critical Infrastructure Division to identify and inspect key elements of
natural gas infrastructure and ensure that they are ready for winter
storms. The division inspected 7,400 facilities last year to ensure
compliance with weatherization protocols. These facilities are also
designated as higher priorities to receive power, protecting them from
potential blackouts.
In addition, more power is
feeding the Texas grid than in 2021, with notable increases in solar and
battery power. The efficiency of solar panels actually improves in cold
weather, although heavy snow on the panels can cause issues. Battery
storage could make an enormous impact during a winter storm, providing
immediately dispatchable power when other sources are not available.
This resource was almost nonexistent in ERCOT during Winter Storm Uri.
All
these changes from the past five years make a repeat of Uri’s effects
on the Texas power grid unlikely. ERCOT has repeatedly stated in recent
days that it expects to have enough power online to handle whatever
challenges Fern presents. With the Texas power grid fully supplied, OFOs
and curtailments on gas pipelines are likely to be much smaller this
time around, which means we have a lower risk of an extreme blowout in
cash prices. However, Fern still represents an enormous demand event,
and wellhead freeze-offs remain a concern. The storm is very likely to
mark the end of the storage surplus to the 5-year average — a fact that
traders have acknowledged in the futures market bullishness of the past
week.
