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Is Natural Gas a Trade or a Trap After Hitting New Lows?
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Key Takeaways
Natural gas prices fell 12% in a week, pressured by mild weather and storage levels above the 5-year average.
Gas rig counts are down, but high production and mild forecasts have kept the market oversupplied.
WMB, LNG and CRK offer upside tied to infrastructure, exports and production exposure.
Natural gas markets endured another volatile week as prices sank to fresh three-month lows, putting pressure on the commodity. The sharp pullback has reignited the debate over whether current levels present a tactical trading opportunity or a value trap for investors. At this time, we advise investors to focus on stocks such as The Williams Companies (WMB - Free Report) , Cheniere Energy (LNG - Free Report) and Comstock Resources (CRK - Free Report) , which offer direct exposure to infrastructure and production dynamics.
A Rough Week for Natural Gas Prices
U.S. natural gas futures ended the week on a weak note, with the front-month contract falling roughly 12% over the week and settling near $3.17 per million British thermal units. Prices briefly traded as low as $3.13 during Friday’s session as mild weather forecasts outweighed a larger-than-expected storage withdrawal. The U.S. Energy Information Administration reported a 119 billion cubic feet draw, but total inventories remained about 1% above the five-year average. As mild weather expectations continued, market participants stayed cautious about winter supply risks, keeping prices under pressure even as there were brief signs of colder conditions later in January.
What Could Move Gas Prices Next
The focus is now on new weather forecasts and the next storage update, both of which could shift market mood. Some models hint at colder weather later in January, which could lift demand, even though near-term conditions remain mild. On the supply side, gas rig counts have fallen to multi-month lows, but production is still high, and storage levels are comfortable. That’s why fewer rigs haven’t tightened the market yet. A prolonged cold spell or freeze-related outages could change this quickly, while continued mild weather would likely put pressure on prices.
Bottom Line for Natural Gas Investors
Even though prices look weak for the short term, natural gas markets can turn quickly. With much of winter still to come, sustained cold or unstable weather could help prices find a floor and potentially rebound. Lower drilling activity also sets the stage for tighter supply later on, even if that effect is not visible yet. For patient investors, these factors suggest that the recent selloff may be overdone.
Still, uncertainty is high, and prices could remain volatile if oversupply concerns continue. Investors may want to focus on companies that benefit from long-term demand growth and infrastructure needs rather than short-term price moves. In that light, names such as The Williams Companies, Cheniere Energy and Comstock Resources remain worth watching as natural gas-focused investors look ahead with cautious optimism.
3 Stocks to Focus on
The Williams Companies: U.S. natural gas demand is projected to grow significantly in the long term, and The Williams Companies seems to be well-positioned to capitalize on the same, owing to its impressive portfolio of large-scale value-creating projects. With its extensive network handling a third of the U.S. natural gas and significant expansion projects in the pipeline, Zacks Rank #3 (Hold), Williams is set to benefit from favorable industry dynamics and growth prospects. You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for the company’s 2025 earnings per share indicates 9.9% year-over-year growth. Williams Companies’ expected EPS growth rate for three to five years is currently 18.6%, which compares favorably with the industry's growth rate of 11.2%.
Cheniere Energy: Cheniere Energy holds a clear competitive edge as the first company to receive regulatory approval to export LNG from its 2.6 billion cubic feet per day Sabine Pass terminal. Strong operations and long-term contracts position the company for substantial growth in both revenues and earnings.
Backed by firm gas supply agreements for its Sabine Pass and Corpus Christi facilities, the Zacks Rank #3 company enjoys strong cash flow visibility and solid long-term growth prospects. Notably, over the past 90 days, the Zacks Consensus Estimate for Cheniere Energy’s 2025 earnings has moved up 20%.
Comstock Resources: It is an independent natural gas producer based in Frisco, TX, with operations concentrated in north Louisiana and East Texas. Comstock Resources — currently carrying a Zacks Rank of 3 — is fully focused on developing the Haynesville and Bossier shales, two of the largest gas plays in the United States.
CRK holds a large acreage position across the Haynesville, giving it direct exposure to Gulf Coast LNG demand growth. Its production is 100% natural gas, making it one of the most gas-levered E&Ps in the sector. The Zacks Consensus Estimate for Comstock Resources’ 2026 earnings per share indicates a 96% year-over-year surge. The firm has a trailing four-quarter earnings surprise of roughly 220.5%, on average.
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Is Natural Gas a Trade or a Trap After Hitting New Lows?
Key Takeaways
Natural gas markets endured another volatile week as prices sank to fresh three-month lows, putting pressure on the commodity. The sharp pullback has reignited the debate over whether current levels present a tactical trading opportunity or a value trap for investors. At this time, we advise investors to focus on stocks such as The Williams Companies (WMB - Free Report) , Cheniere Energy (LNG - Free Report) and Comstock Resources (CRK - Free Report) , which offer direct exposure to infrastructure and production dynamics.
A Rough Week for Natural Gas Prices
U.S. natural gas futures ended the week on a weak note, with the front-month contract falling roughly 12% over the week and settling near $3.17 per million British thermal units. Prices briefly traded as low as $3.13 during Friday’s session as mild weather forecasts outweighed a larger-than-expected storage withdrawal. The U.S. Energy Information Administration reported a 119 billion cubic feet draw, but total inventories remained about 1% above the five-year average. As mild weather expectations continued, market participants stayed cautious about winter supply risks, keeping prices under pressure even as there were brief signs of colder conditions later in January.
What Could Move Gas Prices Next
The focus is now on new weather forecasts and the next storage update, both of which could shift market mood. Some models hint at colder weather later in January, which could lift demand, even though near-term conditions remain mild. On the supply side, gas rig counts have fallen to multi-month lows, but production is still high, and storage levels are comfortable. That’s why fewer rigs haven’t tightened the market yet. A prolonged cold spell or freeze-related outages could change this quickly, while continued mild weather would likely put pressure on prices.
Bottom Line for Natural Gas Investors
Even though prices look weak for the short term, natural gas markets can turn quickly. With much of winter still to come, sustained cold or unstable weather could help prices find a floor and potentially rebound. Lower drilling activity also sets the stage for tighter supply later on, even if that effect is not visible yet. For patient investors, these factors suggest that the recent selloff may be overdone.
Still, uncertainty is high, and prices could remain volatile if oversupply concerns continue. Investors may want to focus on companies that benefit from long-term demand growth and infrastructure needs rather than short-term price moves. In that light, names such as The Williams Companies, Cheniere Energy and Comstock Resources remain worth watching as natural gas-focused investors look ahead with cautious optimism.
3 Stocks to Focus on
The Williams Companies: U.S. natural gas demand is projected to grow significantly in the long term, and The Williams Companies seems to be well-positioned to capitalize on the same, owing to its impressive portfolio of large-scale value-creating projects. With its extensive network handling a third of the U.S. natural gas and significant expansion projects in the pipeline, Zacks Rank #3 (Hold), Williams is set to benefit from favorable industry dynamics and growth prospects. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for the company’s 2025 earnings per share indicates 9.9% year-over-year growth. Williams Companies’ expected EPS growth rate for three to five years is currently 18.6%, which compares favorably with the industry's growth rate of 11.2%.
Cheniere Energy: Cheniere Energy holds a clear competitive edge as the first company to receive regulatory approval to export LNG from its 2.6 billion cubic feet per day Sabine Pass terminal. Strong operations and long-term contracts position the company for substantial growth in both revenues and earnings.
Backed by firm gas supply agreements for its Sabine Pass and Corpus Christi facilities, the Zacks Rank #3 company enjoys strong cash flow visibility and solid long-term growth prospects. Notably, over the past 90 days, the Zacks Consensus Estimate for Cheniere Energy’s 2025 earnings has moved up 20%.
Comstock Resources: It is an independent natural gas producer based in Frisco, TX, with operations concentrated in north Louisiana and East Texas. Comstock Resources — currently carrying a Zacks Rank of 3 — is fully focused on developing the Haynesville and Bossier shales, two of the largest gas plays in the United States.
CRK holds a large acreage position across the Haynesville, giving it direct exposure to Gulf Coast LNG demand growth. Its production is 100% natural gas, making it one of the most gas-levered E&Ps in the sector. The Zacks Consensus Estimate for Comstock Resources’ 2026 earnings per share indicates a 96% year-over-year surge. The firm has a trailing four-quarter earnings surprise of roughly 220.5%, on average.