Natural Gas --October 2025 January 2026 Spread

One month ago, we wrote about the October 2025? January 2026 spread. At that time, we wrongly felt that the spread had topped out towards 81 cents. At that time, the spot futures were valued at about $3.725. The subsequent strong rally in the spot futures to $4.375 saw the October January spread narrow further to near 70 cents. But, oddly enough, the further rally to $4.55 in the spot futures flat price in early March did not see the October January spread narrow any further beyond 70 cents.

In fact, this week as the futures rallied back to ( and above ) $4.55, the January 2026 contract has gained on the October 2025 contract as the mantra has become a worry about filling storage for the coming winter.

The notion of worries over storage refilling are exemplified in the EIA's STEO seen Tuesday. In it , they forecast end of October 2025 storage at 3.606 TCF, down from their forecast one month prior of 3.680 TCF. Thus, strength in the back end of the NG curve has seen the October January spread widen to a current value near 89 cents. Over the past week and a half, we have seen options strategies in this spread executed on the CME. The options trades suggest a widening of the spread. Here we saw a trade in which the 50 cent call was sold collecting 6.5 cents and the $1.00 put was purchased at a cost of 10 cents and the $1.50 put was sold collecting 2.7 cents. Thus, the purchaser of the $1.00 put spent a total of 0.8 cents and is believing? that the October January spread will stay between 50 cents and $1.50-with the belief that it will trade at a value of more than $1.00 January premium to October. We also note a large amount of $1.50/$2.00 October January calendar spread put options traded at 2.0 cents cost to the buyer of the $1.50 put.

Technically, momentum favors the January gaining a bit more on the October. The next target may be testing support from one month ago near 93 cents. The spread was as low as $1.055 back in December. Resistance for the October versus the January lies at 75 cents and then the aforementioned 70 cents area.

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