Energy Market Update: February 2026

The Shipley Energy Commercial Solutions Team is excited to share the February Energy Market Update to inform you of trends, weather, and other factors impacting the energy market.

Read the January 2026 Energy Market Update ->

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• Petroleum Update
• Electricity Update
• Natural Gas Update

Petroleum & Refined Products

The recent cold snap in the Northeast US, particularly the coldest January since 2014 in key areas like Pennsylvania, New Jersey, and parts of the broader Mid-Atlantic region, has lit a fire under distillate demand. Heating oil and ULSD consumption exploded as residential and commercial heating needs surged amid sustained sub-normal temperatures.

This demand spike drove regional rack prices for ULSD to eye-popping levels: basis blew out to around +20 cpg over NYMEX, marking the widest since early 2024 (February levels). The screen itself showed very steep backwardation, reflecting immediate physical tightness and expectations of rapid drawdowns.

On the supply side, the extreme cold triggered multiple unplanned refinery outages across PADD 1 (East Coast) and parts of PADD 2 (Midwest), crimping production rates. Waterborne crude deliveries to regional refiners were further hampered by ice blockages on key waterways, forcing run cuts and exacerbating the shortfall.

Logistics added fuel to the fire: Colonial Pipeline went fully allocated from the Gulf Coast all the way up to New York Harbor, effectively capping incremental supply flows from southern refining centers. This bottleneck locked in the physical premium and made prompt barrels extremely valuable.

Looking ahead, we expect the cold to persist into at least the first half of February, layering even more heating demand on top of already elevated levels. That should keep the market tight in the near term. However, as we move deeper into the month, and assuming any moderation in the pattern, backwardation should flatten out as inventories begin to rebuild and waterborne refined products start landing in the Northeast within the next 1-2 weeks.

Iran and US diplomatic nuclear talks have recently failed on “non-nuclear issues”, while it has been reported that the U.S. has conducted five strikes against multiple Islamic state targets. This has already added ~5-6cpg up front on refined products and $2 to WTI, currently at $65.10.

Bottom line: We expect the prompt strength to remain for a couple weeks but watch for the inevitable mean-reversion as February progresses. Weather forecasts and pipeline nominations will dictate the next moves.

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Electricity Market Update

February 2026 NYMEX expired at $7.460/MMBtu. This is the highest February NYMEX expiration price in the last 18 years. ($7.996, 2008)

• Henry Hub reported a nominal price of $30.57/MMBtu last week, which is considered a record-high rate. Prices at the Henry Hub increased 81% over the week, with Winter Storm Fern bringing sub-freezing temps across much of the country. There is a likelihood that prices will remain increased until demand for space-heating eases

• For the week ending January 28, a total of 118 Bcf of LNG-carrying capacity departed U.S. ports, a decline of 22 Bcf from the previous week. During that period, 31 LNG vessels departed, down six vessels week over week. Five terminals reported fewer vessel departures compared with the prior week, while one terminal reported an increase. Meanwhile, three LNG vessels with a combined 11 Bcf of LNG-carrying capacity arrived at U.S. ports, compared with no arrivals the previous week

• Average storage withdrawals ended up being 2% higher than the 5-year average since withdrawal season started in November. There was a net withdrawal of 242 Bcf the week ending January 23, 2026.

Factors impacting the natural gas markets currently:

• We are now in withdrawal season and our biggest drivers for price volatility are weather and production rates
• Recent volatility has been attributed to weather forecasts which impact demand, and storage injections.

Action Advice: We recommend checking in frequently with your account manager.

Other rate options include Basis Only or NYMEX Lock deals to separate the two elements of your natural gas supply price to look for potential value vs standard Fixed pricing. For those who want to float their NYMEX, consider a cap and floor structure to economically manage your risk. Ask your Account Manager for details.

February 2026 Natural Gas NYMEX Settlement Price: $7.460/MMBtu
Last month: January 2026 Natural Gas NYMEX Settlement Price: $4.687/MMBtu
Last year: February 2025 Natural Gas NYMEX Settlement Price: $3.535/MMBtu