US Oil & Gas Exploration and Production: I am...(Super) El Niño – Natural Gas Equity Biweekly

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US Oil & Gas Exploration and Production: I am...(Super) El Niño – Natural Gas Equity Biweekly

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06 Jul 2026 05:00:00 ET │ 19 pages

US Oil & Gas Exploration and

Production

I am…(Super) El Niño – Natural Gas Equity Biweekly

Scott Gruber AC

CITI'S TAKE +1-212-816-8919

scott.gruber@citi.com

The Midwest and East Coast baked under a heatwave last week, but we

investigate another emerging weather phenomenon – a “Super El Niño” Paul Diamond AC

event as tropical waters in the Pacific Ocean are warming rapidly. The NOAA +1-212-816-0638

ascribes a >95% probability of an El Niño event lasting through Mar’27, with paul.diamond@citi.com

a 63% chance it reaches very-strong or super status by year-end. The last

major El Niño in 2015/’16 resulted in 11% fewer U.S. heating-degree-days Johan Monge

(HDDs) over November to March. Inputting this into our weather-adjusted +1-212-816-2803

gas storage model would point to a reduction in the winter inventory draw johan.monge@citi.com

by ~670bcf or about a third below normal. In our previous biweekly (link), we

noted how data center power demand growth was being largely met by solar

and storage near term. All together the domestic gas market appears well

supplied into 2027, in-line with the views from our Commodity team (link).

Natural Gas Equities — Gas-weighted E&Ps have rebounded since their mid-June

lows due to a combination of hot temperatures and rotation out of oil E&Ps (tied to

optimism surrounding resolution of the US-Iran conflict). Over the past month,

CRK’s returns of +12% have led our gas-weighted E&P coverage, while EQT and RRC

have trailed at -4% and -5%, respectively.

Super El Niño — The last major El Niño phenomenon occurred in 2015-2016 and

during the gas inventory draw months of Nov’15-Mar’16, the number of HDDs were