Author: Timothy St. John

On Friday, natural gas futures fell after the latest EIA report and then rose after weather forecasts called for more winter weather to come.

The Energy Information Administration reported that 52 billion cubic feet of gas was withdrawn last week, which was less than expected. That report caused the price of gas futures in the United States to drop to $2.83/MMBtu. Then, forecasters called for cold weather in the upcoming weeks, bringing the price back up to $2.84.

With a smaller withdrawal than expected, the gas prices dipped, but the cold weather that is headed into the United States could dramatically increase demand. Investors should weigh the current inventory levels against that promise of cold weather, as stockpiles are about 7.5% higher now than they were at the same time last year.

High Production Expected to Keep Prices Low

Over the next few months, production of natural gas should only grow. Production levels will ramp up during the spring and summer, especially as new production lines are started and new production facilities go into action. As of the latest report, the lower 48 states were putting out about 108.7 bcfd for February. That number should get higher next month even as demand falls off for the springtime.

Prices will continue to be pulled down by heavy production, and lower demand as the year progresses will result in excessively high inventories that are on par with what we saw last year. The price of gas futures remained low through much of 2025 until cold weather finally forced demand higher. Even then, the inventories were overflowing with natural gas, and there was no shortage to make prices go very high.

The same issue is likely to weigh on gas futures through the middle of 2026 especially, as by that time, production facilities will be operating at their peak and will have little demand from the market to pull inventory levels down. Price indicators support a bearish market that is unlikely to retain gains. The broad pattern shows that gas futures could not keep their January increases and may not be able to sustain any extended rally, even with cold weather coming in.

The price is consolidating around $2.80, and investors may put up a fight as the price begins to drop, but after the cold weather passes, we do not think the price will remain above $2.80. Investors should prepare for an extended bear market through much of the spring and the summer, especially as U.S. export sales drop with diminishing demand.

Dropping 1.5% on Thursday, U.S. natural gas futures fell to $2.82/MMBtu on the news that the withdrawals this week were smaller than normal.

The Energy Information Administration (EIA) reported withdrawals, and the low numbers prompted a further decline by LNG futures. Total inventories are now at 2.018 trillion cubic feet for the U.S., which means that the current level is around 0.3% below the five-year average.

 Gas prices continue to drop as warm weather spreads, and that situation is not likely to change very much over the coming weeks. Minor reports of strong exports or heavy withdrawals could help bring the price back up close to $3, but gas is expected to find support around $275 right now.

Where Gas Futures Are Headed

If LNG prices for the United States fall below $2.75, the next support level will be at $2.50, and it is safe to say the market should see prices around there very soon. Last week, utilities withdrew 52 billion cubic feet, which is very little compared to 252 billion bcf the previous year. It is also well below the five-year withdrawal average of 168 bcf.   

Exports are still high for now, with 18.7 bcfd reported for that arm of the LNG market, but all industry projections point toward declining export sales as well in the coming weeks. The export market is a growing one for the United States and one that has done tremendously well over the last decade, with eight export terminals now in operation.

Warming temperatures are sure to drive down demand for exported natural gas over the next few weeks, which means that export levels will not significantly contribute to the price for LNG for a while.

The EMA charts show mostly bearish buying and selling trends that do not indicate sustained rallies. In fact, when the price rallies, investors appear to be taking the opportunity to sell quickly, which causes the price to drop once more. The daily chart shows a sustained, simple downtrend we do not expect to suffer significant disruptions for now.

Headline news with tensions rising in Iran and a confident State of the Union address are not enough to move the current trends in the other direction. Outflows and export numbers are not making much of an impact either, and the current selling trend should continue unabated as temperatures rise and demand falls away. There is no indication that the market has exhausted its downward pressure.

LNG futures in the United States fell to a five-month low late in the session on Tuesday but then surged higher on Wednesday on positive export data.

Exports for U.S. natural gas plants helped to lift gas futures closer to $3 on Wednesday. The price had fallen to $2.83 on Tuesday, which was the lowest price data for the commodity since September 2025. However, futures pushed up to $2.89 by the afternoon stretch of the Wednesday session.

Export data shows that the United States is shipping LNG to trade partners at an impressive rate- up to 18.7 billion cubic feet per day for the month of February. This may not last for long, industry experts warn, since demand is expected to drop as mild temperatures settle around the globe.

Gas Prices Rebound

Gas futures are recovering from yesterday’s tough session, but investors should anticipate prices dropping again soon. As warm weather approaches, it should not leave much room for cold snaps this late in winter. The temperature for much of the United States should be warmer than usual in early March, according to weather forecasts, and that will drive down demand for natural gas.

At the same time, gas reserves are filling up and will likely hit normal levels this summer. January’s severe ice storm drained the inventories for days, but the impact has not led to abnormally high prices. Gas futures have trended down on the wide outlook since February 13^th.

As February draws to a close and summer begins, there is far less risk that the warming weather will suffer any disruptions from cold temperatures. Supplies should mostly remain abundant throughout the spring and summer, and experts are likely to slow down to reflect diminishing demand.

Production is still high across much of the United States, and the lower 48 states are recording production output around 108.7 bcfd for February. That is higher than January’s production levels and will quickly ensure that the storage levels, now 6% below normal, will quickly recover.

The next test for natural gas futures may be around $2.75 at around 88% of the Fibonacci retracement. We could see a test at this price later this week, and Wednesday’s gains may quickly be overturned. Analysts agree, though, that if the current price holds and the futures retain their progress, they may activate a bullish reversal.