Natural Gas News: Bearish Forecast as Milder Weather Hits Market Sentiment Today

Mild Weather and Storage Data Pressure U.S. Natural Gas Futures

U.S. natural gas futures edged lower on Friday as traders reacted to forecasts of milder temperatures for early February and a lower-than-expected storage withdrawal reported by the Energy Information Administration (EIA). After Thursday’s rally met resistance near $4.053, prices slipped below a key pivot point at $3.850, signaling sustained selling pressure.

The week’s price action indicates a bearish trend, with $3.711 serving as a critical support level. Breaking this point could trigger accelerated selling, targeting previous lows at $3.330 and the 50-day moving average near $3.231. Traders are closely monitoring this technical setup for signs of increased volatility.

At 13:47 GMT, Natural Gas Futures are trading $3.832, down $0.113 or -2.86%.

Is Weather Demand Losing Its Grip on Prices?

The latest outlook from NatGasWeather forecasts Arctic air to maintain strong natural gas demand through Friday, with subzero temperatures blanketing much of the interior U.S. and lows reaching the teens across the South. However, this demand will ease heading into the weekend as milder temperatures settle over the southern and eastern U.S., with highs climbing into the 40s-60s and even 70s in parts of Texas.

Looking further ahead, the weather pattern for early February appears less supportive, with mild conditions dominating key consuming regions. While frosty air will persist in the northern Rockies and Plains, it will not extend far enough south to drive significant demand. This milder outlook is weighing heavily on the market, keeping bullish sentiment in check despite a notable surplus-to-deficit shift in inventory balances this week.

Storage Report Undermines Bullish Momentum

The EIA’s latest storage report showed a draw of 223 Bcf for the week ending January 17, bringing total inventories to 2,892 Bcf. While this was 57 Bcf lower than the same time last year, it remained 21 Bcf above the five-year average of 2,871 Bcf.

Traders interpreted the smaller withdrawal as a sign of improving supply dynamics, especially as Lower 48 production remains robust. Meanwhile, easing heating demand is expected to prevent significant inventory depletion, keeping storage levels within the five-year historical range. These factors are adding downward pressure to prices and tempering bullish sentiment.

Market Forecast: Bearish Near-Term Outlook

With forecasts pointing to milder weather across key regions and storage data reflecting improving supply conditions, natural gas prices are likely to face further downside in the near term.

Breaking below $3.711 could lead to an extended selloff, with potential support near $3.330 and $3.231. Until weather-driven demand intensifies or supply tightens meaningfully, the market’s path of least resistance appears bearish.

More Information in our Economic Calendar.