Medium and high resolution spectroscopy of U Equulei from 1 to 4 microns during 1997-2003 has revealed information about its unusual circumstellar envelope, observed previously at optical and radio wavelengths. Strong absorption bands of H2O and of CO dominate the 1-4um spectrum. The gas has a mean temperature of 600 K and 12C/13C =< 10. The CO 2-0 line profiles and velocities imply no net ejection or infall and indicate either rapid radial gas motions being seen along a narrow continuum beam, or absorption by orbiting gas that is nearly coincident with a highly extended continuum source. The gas could be located in a disk-like structure. The observed high column densities of warm CO and H2 normally would be associated with sufficient dust to completely obscure the star at optical wavelengths. The observations thus indicate either a highly abnormal gas-to-dust ratio, consistent with the earlier optical observation of abundant refractory metal oxides in the circumstellar gas, or peculiar geometry and/or illumination.

21 pages incl. 8 postscript figures and 1 table; typos corrected