The broader market reaction to the new R1 AI model from DeepSeek extended into U.S. natural gas, analysts at Standard Chartered Bank said in a report sent to Rigzone late Tuesday by Standard Chartered Bank Commodities Research Head Paul Horsnell.
“Henry Hub for February delivery traded down to $3.609 per million British thermal units (MMBtu) intra-day 27 January, before settling at a 19-day low of $3.697 per MMBtu, an 8.2 percent fall on the day,” analysts at the bank, including Horsnell, said in the report.
Prior to this, prices had been elevated by extreme cold across the lower 48 states, the analysts noted in the report.
“This has been replaced by a general ‘above normal’ temperature pattern for most of the southern U.S. in the latest six- to 10-day temperature outlooks, partly contributing to price weakness,” they added.
“Longer-term demand for natural gas in U.S. domestic power generation, to support expected growth in data center energy consumption, has been highly price supportive along the forward curve,” they continued.
The analysts went on to state in the report that “the emergence of DeepSeek, and the competition and innovation it represents, does not completely derail the plans for data center growth in the U.S., supported by natural gas fired power stations”.
They added, however, that “it is likely to broaden the geographic spread of these installations and focus attention on energy efficiency”.
In an analysis piece sent to Rigzone on Wednesday, Michael Brown, Senior Research Strategist at Pepperstone, said, “sentiment was somewhat steadier yesterday, as Monday’s panic over DeepSeek’s potential AI shake-up gave way to much calmer heads”.
In another analysis piece sent to Rigzone on Tuesday, Brown said, “participants sought shelter yesterday [Monday], amid a brutal equity sell-off, as sentiment around the AI sector soured dramatically”.
Standard Chartered’s report showed that the company expects the NYMEX basis nearby future Henry Hub natural gas price to average $3.20 per MMBtu in the first quarter of 2025, $3.50 per MMBtu across the second and third quarters, $2.80 per MMBtu in the fourth quarter, $3.20 per MMBtu in the first quarter of 2026, and $3.70 per MMBtu in the second quarter of next year.
Standard Chartered Bank expects the commodity to average $3.30 per MMBtu overall in 2026, $2.80 per MMBtu overall in 2027, and $3.13 per MMBtu overall in 2028, the report revealed.
A research note sent to Rigzone by the JPM Commodities Research team on Friday showed that J.P. Morgan expected the U.S. natural gas Henry Hub price to average $3.55 per MMBtu in the first quarter of 2025, $3.10 per MMBtu in the second quarter, $3.55 per MMBtu in the third quarter, $3.80 per MMBtu in the fourth quarter, and $3.50 per MMBtu overall in 2025.
The note highlighted that J.P. Morgan saw the commodity coming in at $4.00 per MMBtu in the first quarter of 2026, $3.50 per MMBtu in the second quarter, $4.00 per MMBtu in the third quarter, $4.25 per MMBtu in the fourth quarter, and $3.94 per MMBtu overall in 2026.
According to its January short term energy outlook (STEO), which was released on January 14 and completed its forecast on January 9, the U.S. Energy Information Administration (EIA) expects the Henry Hub spot price to average $3.14 per MMBtu in 2025 and $3.97 per MMBtu in 2026.
The EIA’s latest STEO sees the Henry Hub spot price averaging $3.21 per MMBtu in the first quarter of 2025, $2.59 per MMBtu in the second quarter, $3.18 per MMBtu in the third quarter, $3.59 per MMBtu in the fourth quarter, $4.03 per MMBtu in the first quarter of 2026, $3.63 per MMBtu in the second quarter, $4.06 per MMBtu in the third quarter, and $4.17 per MMBtu in the fourth quarter of next year.
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