Freeze causes major disruptions in US lower 48 oil and gas output – Rystad Energy market update

As Winter Storm Fern swept across the US this weekend, Rystad Energy predicts the freeze will continue to cause major disruptions to US onshore oil and gas production.

The chart below extrapolates this to monthly averages, offering our view on the total impact on January output, based on our initial intelligence of the freeze. Our initial pre-freeze assessment was already down by 1.5 Bcfd compared with our December US Oil & Gas Production Outlook, with January 2026 anticipated to average 104 Bcfd for the Lower 48, excluding offshore Gulf. We see a base case downside impact of 3.3 Bcfd, with the potential for an additional 2.3 Bcfd, primarily driven by a significant curtailment scenario in the Permian similar to Winter Storm Uri in 2021. Of our initial assessment, a reduction of 1.7 Bcfd comes from the Petroleum Administrative of Defense Districts (PADD) 3, which includes the Permian, Haynesville and Eagle Ford.

In the chart below, we interpret outages from gas pipeline data into assessments on the impact of oil output, using the gas-to-oil ratio (GOR) as a means for the estimation. Following the same analysis as for gas, our initial January pre-freeze assessment of 11.378 million barrels per day (bpd) for onshore Lower 48 will likely see a monthly average impact in January of 390,000 bpd – driven significantly by the Permian and PADD 3 more broadly. The impact should be more limited in other oil regions like the Bakken, Rockies and the Mid-Continent. The maximum downside scenario as described above would feature an additional impact of 273,000 bpd.

With the impact of both the immediate storm effects and the overall demand growth from a now cold January, the 2026 Henry Hub price curve has been lifted to be on par with early December for March-December (although still lower in 2027, as it has not moved much from earlier trade dates in January). Yet, the average for February-December 2026 now stands at $4.31 per million British thermal units (MMBtu) as of market open on 26 January. As producers prepare their budgets for release in February, this shift could entice some to increase their activity. Even so, operators may remain disciplined given the market volatility, having just faced bearish headwinds and a February-December 2026 average of $3.22 barely one week earlier.