US natural gas futures climbed to around $3.50 today, up roughly 8.35% in a single session. The move comes on top of an already historic surge over the past three days, during which prices rose nearly 60%. Volume remained heavy, reflecting intense trading activity and ongoing repositioning across the market.
The rally continues to be driven by a tight near-term supply and demand balance. Colder-than-expected weather forecasts across large parts of the Midwest and Northeast are pushing heating demand higher at a time when storage levels are already strained. Inventories entered this period below seasonal norms, leaving little buffer against demand shocks.
Production growth has not kept pace with the sudden rise in consumption expectations. While US natural gas output remains high in absolute terms, producers have been cautious after extended periods of low prices. That restraint is now showing up in price sensitivity. Small changes in demand assumptions are producing large price reactions.
Liquefied natural gas exports add another layer of pressure. US export terminals are operating near capacity, sending large volumes overseas and reducing the amount of gas available for domestic storage. This structural demand keeps the US market tightly linked to global conditions, limiting how quickly prices can cool.
What triggered the sudden US natural gas price spike
The sudden spike in US natural gas prices has triggered an immediate fuel-switching response across the power sector. As gas prices surged past the $4.70 per MMBtu threshold, coal quickly became the cheaper option for many utilities. Power producers that were expected to scale back coal usage are now reassessing their fuel mix, setting the stage for a quiet but meaningful rebound in US coal-fired generation.
Electricity prices were already under pressure before the gas surge. Demand from AI data centers has driven capacity costs sharply higher, especially in the Mid-Atlantic PJM region, where capacity prices have risen nearly seven-fold over the past three years. The jump in gas prices adds another layer of stress, forcing utilities to pass through fuel surcharges on top of already elevated base rates. That combination is now filtering directly into higher power bills.
Global LNG links US gas shocks to world markets
The US natural gas market no longer moves in isolation. As the world’s largest LNG exporter, the US is now deeply tied to global gas flows. Current exports are running close to 19 billion cubic feet per day, meaning domestic price spikes immediately affect international markets. As US prices rise, the gap between American gas and European or Asian benchmarks narrows, reducing flexibility in global supply.
At the same time, Asia is facing its own demand shock. China is experiencing an unusually severe cold wave, with temperatures plunging around 16 degrees Celsius below normal in some regions. This has pushed Asian LNG prices toward $11 per MMBtu, intensifying competition for cargoes. Strong overseas demand is keeping US export volumes high, tightening domestic supply and reinforcing the upward pressure on prices.
Oil prices lag as supply surplus caps the upside
While natural gas is surging, crude oil markets are telling a very different story. Brent crude is trading near $63.49 a barrel, while WTI is struggling to hold above $60. Unlike gas, oil is not facing immediate storage anxiety. Instead, it is weighed down by a growing supply surplus.
Non-OPEC production from countries such as Brazil, Guyana, and Canada is expanding at a pace far above global demand growth. According to projections from the International Energy Agency, the oil market could face a surplus of nearly 3.7 million barrels per day in 2026. That excess supply is placing a firm ceiling on oil prices, even as colder weather boosts energy demand elsewhere.
Metals gain momentum from the data center supercycle
Beyond energy, industrial metals are emerging as a major theme in 2026. Investors are increasingly rotating away from traditional safe havens like gold and into so-called working metals that benefit directly from infrastructure expansion. Copper has been the standout, recently hitting a record near $12,558 per tonne.
The same AI-driven boom that is lifting electricity demand is also driving copper consumption. Massive amounts of copper are required for grid upgrades, data center construction, and advanced cooling systems. Analysts now expect 2026 to bring the largest global copper supply deficit in more than two decades, turning the metal into one of the most structurally tight commodities alongside natural gas.
Commodity markets reflect sharp divergence in fundamentals
Recent price action highlights how uneven commodity fundamentals have become. Natural gas climbed to around $3.50, posting a daily gain of more than 8% as cold weather and short covering collided. Heating oil also moved higher on regional winter demand, while gasoline rose modestly amid seasonal refinery adjustments.
Crude oil prices, by contrast, barely moved. WTI edged up just 0.07%, and Brent gained 0.02%, underscoring how surplus supply is offsetting weather-related demand. This divergence shows that inflation risks tied to commodities are becoming more selective, concentrated in gas, power, and certain industrial metals rather than across the entire energy complex.
Why this matters for inflation and markets in 2026
The broader implication is that inflation risks are becoming more fragmented. Higher natural gas and electricity prices can quickly feed into household bills and industrial costs, even if oil prices remain capped. Strong LNG exports and global competition mean US gas markets will stay sensitive to international shocks.
At the same time, structural deficits in metals like copper suggest longer-term price pressure tied to infrastructure and technology investment. Together, these trends point to a 2026 market shaped less by broad commodity inflation and more by targeted supply constraints, where energy and materials linked to AI and electrification carry outsized influence.
