# Natural Gas

> Natural gas prices are driven by weather, storage, production and LNG exports. Learn Henry Hub futures, the storage report, seasonality and why gas is so volatile.

Source: https://learn.tradelabsai.com/commodities/natural-gas/  
Track: Commodities · Level: Intermediate · Updated: 2026-10-03  
Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice.  
Cite as: TradeLabs Learn, "Natural Gas", https://learn.tradelabsai.com/commodities/natural-gas/

Natural gas heats homes, fuels power plants and feeds industry. It is one of the most volatile major commodities, often moving 5% or more in a single day, because demand depends heavily on weather and supply cannot quickly adjust. In the US, the benchmark is Henry Hub natural gas, traded as NYMEX futures. Globally, liquefied natural gas (LNG) links regional markets such as Europe's TTF and Asia's JKM. Understanding storage, weather and seasonality is essential for trading gas.

## The benchmarks

| Benchmark | Region | Units |
|---|---|---|
| Henry Hub (NYMEX NG) | United States, Louisiana delivery point | Dollars per million British thermal units (MMBtu); 10,000 MMBtu per contract |
| TTF (Title Transfer Facility) | Europe (Netherlands) | Euros per megawatt hour |
| JKM (Japan Korea Marker) | Asian LNG | Dollars per MMBtu |
| NBP | United Kingdom | Pence per therm |

A $0.001 tick on NYMEX natural gas is worth $10 per contract, so a $0.10 move is $1,000.

## What drives natural gas prices

| Driver | Effect |
|---|---|
| Weather | Cold winters and hot summers raise demand for heating and power |
| Storage levels | Compared with the five year average, a key gauge of tightness |
| Production | US shale output from regions such as the Appalachian (Marcellus) and Permian basins |
| LNG exports | US export capacity links Henry Hub to global prices |
| Power sector | Gas competes with coal and renewables for power generation |
| Hurricanes | Can disrupt Gulf Coast production and LNG terminals |

## The weekly storage report

The US Energy Information Administration publishes the Weekly Natural Gas Storage Report every Thursday at 10:30 a.m. Eastern. It shows the change in working gas in underground storage. Prices often move sharply when the reported change differs from analyst expectations.

**Example: Reading a storage surprise**
Analysts expect a storage injection of 85 billion cubic feet (Bcf) for the week. The EIA reports an injection of 62 Bcf, meaning demand was stronger or supply weaker than expected. Total storage is now 4% below the five year average. Natural gas futures jump 6% within minutes, from $3.20 to $3.39. One contract gains about 190 ticks × $10 = $1,900. See [Storage and Inventories](https://learn.tradelabsai.com/commodities/storage-and-inventories/) and [News Trading](https://learn.tradelabsai.com/strategies/news-trading/).

## Seasonality

- **Injection season (April to October):** gas flows into storage.
- **Withdrawal season (November to March):** storage draws to meet winter demand.
- **Winter premium:** winter contracts usually trade above summer contracts.
- **Shoulder months** (spring and autumn) have lower demand.

The March April spread, the switch from withdrawal to injection, is known as the "widow maker" because of its violent moves and its role in the 2006 collapse of the hedge fund Amaranth Advisors, which lost about $6 billion in weeks on natural gas spreads. See [Seasonality in Commodities](https://learn.tradelabsai.com/commodities/seasonality-in-commodities/), [Calendar Spreads in Futures](https://learn.tradelabsai.com/futures/calendar-spreads-in-futures/) and [Amaranth Advisors](https://learn.tradelabsai.com/history/amaranth-advisors/).

## The shale revolution and LNG

Horizontal drilling and hydraulic fracturing unlocked huge US gas supplies from the late 2000s, pushing Henry Hub prices down and turning the US into the world's largest LNG exporter by 2023. LNG exports now connect US prices to European and Asian demand, though transport costs and capacity limits mean regional prices can still differ widely. In 2022, European TTF prices exceeded €300 per megawatt hour while Henry Hub peaked under $10 per MMBtu. See [Energy Markets](https://learn.tradelabsai.com/commodities/energy-markets/).

## Why natural gas is so volatile

- **Weather dependence:** forecasts can change daily.
- **Limited short term supply flexibility.**
- **Storage constraints:** when storage is very low or very high, prices react strongly.
- **Regional bottlenecks:** pipelines and LNG terminals limit flows.

## Trading natural gas

- **Futures and options** on NYMEX, plus TTF futures on ICE Endex.
- **Calendar spreads** to trade seasonality.
- **ETFs** such as natural gas futures funds, which have historically suffered heavy losses from contango and roll costs. See [Roll Yield](https://learn.tradelabsai.com/futures/roll-yield/).
- **Weather based analysis:** traders follow heating and cooling degree day forecasts.

## Frequently asked questions

### What is Henry Hub?

A natural gas pipeline hub in Louisiana and the delivery point for NYMEX natural gas futures, the main US price benchmark.

### When is the natural gas storage report released?

The EIA releases it every Thursday at 10:30 a.m. Eastern time, with occasional schedule changes around holidays.

### Why is natural gas so volatile?

Because demand depends on weather, supply responds slowly, and storage levels and regional bottlenecks can amplify imbalances.

Next, learn about refined products in [Gasoline and Heating Oil](https://learn.tradelabsai.com/commodities/gasoline-and-heating-oil/).

## Continue learning

- Next lesson: [Gasoline and Heating Oil](https://learn.tradelabsai.com/commodities/gasoline-and-heating-oil/)
- Previous lesson: [Crude Oil](https://learn.tradelabsai.com/commodities/crude-oil/)
- Related: [Crude Oil](https://learn.tradelabsai.com/commodities/crude-oil/): Crude oil is the world's most traded commodity. Learn WTI vs Brent, the futures contracts, OPEC+, shale, inventory reports and how traders approach oil.
- Related: [Energy Markets](https://learn.tradelabsai.com/commodities/energy-markets/): Energy markets cover crude oil, natural gas, refined products and power. Learn the benchmarks, how they connect, what drives prices and how energy is traded.
- Related: [Seasonality in Commodities](https://learn.tradelabsai.com/commodities/seasonality-in-commodities/): Many commodities follow seasonal patterns tied to weather, harvests and demand. Learn key patterns in grains, energy and softs, how to measure them and their limits.
- Related: [Storage and Inventories](https://learn.tradelabsai.com/commodities/storage-and-inventories/): Inventories are the buffer between commodity supply and demand. Learn the theory of storage, how stocks affect prices and curves, and the key inventory reports.
- Related: [Calendar Spreads in Futures](https://learn.tradelabsai.com/futures/calendar-spreads-in-futures/): A futures calendar spread buys one contract month and sells another. Learn bull and bear spreads, what moves them, seasonality and a worked crude oil example.
- Related: [Amaranth Advisors](https://learn.tradelabsai.com/history/amaranth-advisors/): In September 2006, hedge fund Amaranth Advisors lost about $6 billion on natural gas futures spreads. Learn the trades, why they failed and the risk lessons.