Why Do Natural Gas Prices Rise in Winter? Storage, Weather and Seasonality

Educational content. This article explains how storage, weather and seasonality move natural gas prices and what that means for a natural gas CFD. It does not constitute investment advice, a recommendation, or an offer to buy or sell any financial instrument. CFD trading carries significant risk of loss and may not be suitable for all investors. Past patterns do not guarantee future results.

Natural gas prices rise in winter because cold weather raises heating demand, which pulls gas out of underground storage between November and March, and the price must ration the gas that remains. The large spikes, however, come from surprises: a cold snap that drains storage faster than expected, not winter itself.

This article covers the winter cycle, how weather becomes a demand number, why the level of storage matters more than the calendar, and a worked case from the winter of 2025-26. It also shows what the cycle means for an NGas CFD. For why gas is more volatile than oil in general, see why natural gas is more volatile than oil; this article does not repeat that comparison.

What Is the Winter Cycle in Natural Gas?

The US gas market runs on a two-season storage cycle: an injection season from April to October, when stocks build, and a withdrawal season from November to March, when stocks fall.

The US Energy Information Administration (EIA) describes the pattern the same way: inventories generally increase from April through October, when consumption is relatively low, and decrease from November through March, when consumption is relatively high (EIA Today in Energy). In a November 2025 EIA analysis, Lower 48 working gas ended the refill season with more than 3,900 billion cubic feet (Bcf), 4 percent above the 2020-24 five-year average and about 92 percent of capacity.

The cycle exists because supply is flat and demand is not. Wells produce gas at a fairly steady rate through the year, while heating demand is concentrated in a few cold months. Storage moves summer production into winter consumption. The price signal that drives the cycle is simple: when stocks are comfortable, the price can stay low, and when stocks fall faster than expected, the price rises until demand or imports adjust.

Source: EIA, Today in Energy (seasonal definitions).

A related mechanism, why gas is costly to store at all, is in the sibling article linked above. Here the point is narrower: the calendar tells you when storage will be drawn, not how fast.

How Does Cold Weather Turn Into Gas Demand?

Cold weather becomes gas demand through heating degree days (HDD), a measure of how far the daily average temperature falls below 65 degrees Fahrenheit.

EIA uses a 65 degree base for heating degree days, and its national figures are population-weighted, so a cold day in a populous region counts for more than the same day in a sparse one. The arithmetic is short. The daily average temperature is the mean of the high and the low. HDD is 65 minus that average, floored at zero.

• A day with a high of 50 and a low of 40 averages 45 degrees. HDD = 65 - 45 = 20.
• A day averaging 25 degrees gives HDD = 65 - 25 = 40, twice as many.
• A day averaging 70 degrees gives HDD = 0, because the result is negative and floored.

Doubling the HDD does not simply double the gas burned in one place, but residential and commercial gas use follows HDD closely, which is why weather forecasts are treated as demand forecasts.

Two other demand channels respond to cold as well. Power generators burn more gas when electricity demand rises with cold weather. Industrial users and exports to Mexico and as liquefied natural gas run all year and compete for the same supply when winter demand arrives. The result is that a cold forecast does not raise one line of demand; it raises several at once, and none of them can wait for the weather to pass.

Why Does Storage Matter More Than the Season Itself?

Storage matters more than the season because the price reflects how much cushion is left against the average, not whether it is winter. A full storage tank in a cold month can still produce a calm market, while a thin one in a mild month can produce a nervous one.

Analysts therefore quote storage as a deviation from the five-year average for the same week. A stock 4 percent above average means the market enters winter with room to absorb cold. A stock 1 percent below average, as EIA reported for the week ending 30 January 2026, means the market has used up that room.

The same logic explains why the weekly numbers matter. EIA publishes the Weekly Natural Gas Storage Report every Thursday, and the price reacts to the gap between the reported change and the expected one; the mechanics are in the sibling article. For winter, the practical point is the direction of the gap. A larger-than-expected draw means the cushion is shrinking faster than the market assumed, and the price has to rise to slow consumption.

Is Winter Already in the Price?

Largely yes: because the winter cycle is predictable, traders price it in months ahead, so what moves the price during winter is the difference between what happened and what was assumed.

This is the most common misunderstanding about the topic. If gas always jumped when winter began, the jump would be a free forecast, and traders would trade it away before it happened. What cannot be priced in is the temperature itself, because weather beyond the short-range forecast is uncertain. A mild winter leaves stocks full and the price falls. A cold one pulls stocks down and the price rises. The price moves on the surprise relative to an expectation that already contains a normal winter.

For a CFD trader the lesson is a practical one. "It is winter, so gas goes up" is a calendar claim, and calendar claims are the part of the market that is already in the quote. What a position is exposed to is the weather forecast changing, and that can go in either direction.

Case Study: What Happened in Winter 2025-26

The winter of 2025-26 shows both halves of the mechanism in one season: a comfortable start, a violent cold spike in January, and a fast reversal.

Read the table from top to bottom. The market entered winter with storage 4 percent above average, and EIA's own forecast was for withdrawals above 1,900 Bcf. The actual season came in at 2,048.4 Bcf, 5 percent above the five-year average, so the season as a whole was only moderately colder than normal in withdrawal terms. Yet the January price average was USD 7.72, and by March it was USD 3.04.

The explanation sits in one week. Extreme cold in late January reduced production through well freeze-offs and shut-ins, and Gulf Coast temperatures averaged below freezing on 25 January, which contributed to the week's largest shut-in. Demand rose while supply fell at the same moment, which is the combination that the spike needs. In the week ending 30 January the storage withdrawal was 360 Bcf, the largest weekly net withdrawal in the history of the report, and the Henry Hub spot price on 28 January was USD 4.05 above the week before. Once milder February and March weather arrived, heating demand eased, and EIA noted that reduced residential and commercial consumption had helped moderate prices since January.

Two readings follow. First, a spike is a short event. The January average of USD 7.72 fell by about 61 percent to the March average of USD 3.04, a drop of USD 4.68. Second, the seasonal story ("winter means high prices") would have predicted a high February and March too; the data show the opposite.

Why Can Supply Fall When Demand Rises?

Supply can fall in the cold because the same freeze that raises heating demand can stop wells and equipment from producing, which narrows the gap between production and demand from both sides.

EIA reported that extreme cold reduced US gas production in January 2026 through equipment freeze-offs and shut-ins. This is a physical failure, not a price response, so a higher price cannot restore the lost output while the freeze lasts. It is one reason the winter price can move faster than a simple demand story would suggest: during the worst days, demand is at its highest and some supply is offline. The same effect was a feature of earlier cold events, and the sibling article covers February 2021 in detail.

The price effect is also asymmetric. A freeze-off ends when temperatures rise, so the supply loss is temporary, and the price spike that it helped create tends to fade quickly, as the February and March averages above show.

What Does the Winter Cycle Mean for an NGas CFD?

For an NGas CFD, the winter cycle means price moves that are large relative to the quote, and a position that is small in dollars can still lose its whole account balance in a single cold week.

The specifications below come from the Vanto feed. The figures are labelled with their date because they change as the market moves.

Source: Vanto feed snapshot, 10 October 2026. The spread row is a single-moment reading and is not representative of typical conditions; use it to compare the relative size of the gap, not as a quoted cost.

Three things stand out in the table.

One dollar is a large move. With a contract size of 100, a USD 1 move is worth USD 100 per lot. At a price of 3.374 that is about 29.6 percent of the price. On USOil the same USD 1 is about 1.1 percent. The weekly rise of USD 4.05 recorded by EIA in January 2026 would have been USD 405 per lot on a 100-unit contract. For the sizing arithmetic across asset classes, see what is contract size in trading.

The minimum lot is 1. NGas does not trade in the 0.01 or 0.1 steps that suit forex and crude, so the smallest position is a full lot of 100 units. See what is minimum lot size in trading.

The relative spread is wider. In this snapshot the NGas gap between bid and ask was about 2.0 percent of the price, against about 0.14 percent on USOil, around fourteen times larger in relative terms. Snapshot spreads are unrepresentative, but the structural point holds: at a low price, the same absolute gap is a larger share of the quote. What is the spread in trading explains how the cost is paid.

The swap carries a structural pattern as well. At this snapshot the NGas long side is a debit and the short side a credit, the reverse of both crude contracts. Rates change daily and are not quoted here; the point is that holding a long gas position through a long winter has a financing cost that compounds, and energies book a triple swap on Friday. See what is swap in trading and what is triple swap day.

Worked Example: Margin and Stop-Out on One Lot

Take a USD 100 balance and a buy position of 1 lot at the ask of 3.442. This is arithmetic, not a trade idea.

1. Notional value = 3.442 x 100 = USD 344.20.
2. Margin at 1:100 = 344.20 / 100 = USD 3.44.
3. Stop-out is at a margin level of 50 percent, so the platform begins closing positions when equity falls to 0.5 x 3.44 = USD 1.72.
4. The loss that takes equity from USD 100 to USD 1.72 is 100 - 1.72 = USD 98.28.
5. At USD 100 per USD 1 of price, that is a move of 0.9828, so the stop-out price is about 3.442 - 0.983 = 2.459.

A fall of 0.983 is 28.6 percent of the entry price. The January 2026 rise of USD 4.05 in a week was larger than the entire price of NGas on this page, and a sharp reversal in the other direction would have been worth the same per lot. Leverage of 1:100 makes the margin small, but it does not make the risk small. It amplifies losses as well as gains, and a short position is exposed to the mirror image of the example when the cold arrives. What is stop-out level in trading covers the mechanism, and what is leverage in trading the amplification.

When Does the Winter Pattern Break?

The winter pattern breaks whenever the weather, the storage level or the supply side differs from what the market assumed, and the 2025-26 season produced all three in a few months.

• A mild cold season. Heating demand stays low, stocks stay full, and the price can fall in the middle of winter. March 2026 averaged USD 3.04, a fraction of the January average.
• Cold arrives late or early. A cold November draws stocks down before the market has built a cushion of its own; a cold March can hold prices up when the market expected them to ease.
• Storage starts high. With stocks 4 percent above average, a normal winter does not move the price much. The cushion absorbs the season, and the move comes only if the cold is extreme.
• Supply fails. Freeze-offs cut production at the worst time. The effect is temporary and the price spike associated with it can unwind as fast as it came.
• The CFD does not equal Henry Hub. The Vanto NGas symbol is described in the feed as natural gas spot. It tracks the same market but is not the same price as the Henry Hub figures quoted by EIA, so the EIA values in this article describe the market, not the NGas quote.

Common Mistakes

• Buying the calendar. Treating "winter" as a signal ignores that the season is already in the price.
• Sizing by lot count. One lot is cheap in margin terms, so it looks small. It is not small in price risk: USD 1 is USD 100.
• Ignoring the reversal. A spike that took a week to build can take two months to unwind, and a position held through a mild February pays financing while the price falls.
• Reading weather headlines as forecasts. The market reacts to the change in the forecast, not to the temperature that has already been reported.

Risk analysis for commodity positions sets out a sizing framework for these cases.

Frequently Asked Questions

Do natural gas prices always go up in winter?

No. The season raises the expectation of demand, but the price moves on the difference between actual and expected weather and storage. In 2025-26 the Henry Hub monthly average was USD 7.72 in January, then USD 3.62 in February and USD 3.04 in March, according to EIA.

What months are the natural gas withdrawal season?

The withdrawal season runs from November to March, when US storage falls as heating demand rises. The injection season runs from April to October, when stocks are rebuilt. These are the EIA definitions used for US storage reporting.

What are heating degree days and why do traders watch them?

Heating degree days measure how far the daily average temperature falls below 65 degrees Fahrenheit, so a day averaging 45 degrees is 20 HDD. Residential and commercial gas use follows HDD closely, so a forecast with more HDD is a forecast of higher gas demand.

Why does the storage level versus the five-year average matter?

It shows how much cushion the market has for the same time of year. In the week ending 30 January 2026, EIA reported storage 1.1 percent below the five-year average after a record 360 Bcf withdrawal, a sign the cushion had been used up.

How much does one lot of NGas move per dollar?

One lot of NGas on Vanto has a contract size of 100, so each USD 1 of price movement is worth USD 100 per lot. At the Vanto feed snapshot of 10 October 2026 that is about 29.6 percent of the bid price of 3.374.

Can a natural gas CFD lose more in winter than the margin?

Yes, the loss on a leveraged position can exceed the margin locked for it, because margin is a deposit and not a cap on loss. At 1:100, 1 lot at 3.442 locks USD 3.44 of margin, but a USD 1 adverse move costs USD 100. Stop-out at 50 percent margin level begins closing positions before the balance reaches zero, but it does not guarantee a fill at a given price.

Calculate the Numbers Before You Trade

Use the trading calculator to see margin, pip value and contract specifications for NGas and the crude contracts before opening a position. For how the commodities market fits together, see how to trade commodities, and for building a weekly view that includes inventory data, see fundamental analysis for commodities. To understand the margin arithmetic behind the worked example, see what is margin in trading.

Risk warning. Trading securities, futures, options, and contracts for differences are complex financial instruments that require knowledge and understanding. Prices can fluctuate significantly and securities may become valueless. Investors may incur losses exceeding the potential for profits. Trading on margin can result in losses greater than the amount initially deposited. Past performance is not necessarily a guide to future performance. The information in this article is for educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any financial instrument. Consider whether CFD trading is appropriate for your circumstances and seek independent advice if necessary.