Natural Gas Prices Tick Upward but Are Not Yet Bullish
Gas futures across the United States are lower than they have been in months as warm weather pervades.
Quick overview
- Gas futures in the U.S. rose 1.35% on Wednesday, but a bullish trend is unlikely due to expected warm weather.
- Increased gas production and mild temperatures are keeping gas prices low, currently around January's lows.
- LNG reserves were cut by 1% during January's winter storms, but experts expect them to normalize by March as warm weather spreads.
- Despite a slight uptick, natural gas prices remain at a 16-month low and are not expected to rise significantly without a cold weather forecast.
Gas futures in the United States rose 1.35% on Wednesday, but investors should not expect a bullish trend at the moment since warm weather is still on the way.
The slight upward movement of natural gas futures on Wednesday are mostly the result of natural market correction and do not indicate strong bullish momentum. Weather forecasts show that warm weather is expected in the coming weeks, but the price of gas is also kept low by increased production.
Gas rates are around their January lows at the moment and may continue to stay low as warm weather creeps in and gas production escalates. The high exports trend that helped the market recently may start to slow down as well since gas production plants are planned for several countries around the world. Additionally, warmer weather is spreading across the globe as winter closes off, which will decrease heating demand and therefore natural gas demand.
Mild Weather Could Build Back Reserves
The LNG reserves across the United States were cut by 1% during January’s fierce winter storms at the tail end of the month. The cold weather continued partway into February, and the last reading showed a 6% below normal level for gas reserves for the month.
Even though reserves are relatively low, especially after months of high injections into the supply in 2025, the early warm weather this winter may cause supply problems again. The expectation among experts is that gas reserves will be back to normal by March as warm weather spreads across the United States.
Higher temperatures will be starting in the south and central areas of the United States, drastically cutting heating demand and LNG business. LNG exports are still relatively high, but that could change in the coming weeks as well when spring weather starts to manifest.
The small uptick on Wednesday is not enough to offset gas prices from a 16-month low. Now at $3.15/MMBtu, natural gas futures across the United States are low and not expected to increase much for weeks unless a cold weather forecast arrives.
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