Natural Gas News: Bearish Forecast as Prices Slide Toward Key $3.733 Pivot on Warmer Weather

Natural Gas Prices Slip as Mild Weather and Storage Data Weigh on Market

U.S. natural gas prices are sliding on Friday, easing off the $4.020 resistance level and approaching a potential retest of the weekly low at $3.862. A critical pivot at $3.733 looms, with buyers potentially stepping in at this level. However, failure to hold this support could push prices toward the 50-day moving average at $3.413, a key trend indicator since December 10.

At 13:18 GMT, Natural Gas Futures are trading $3.892, down $0.042 or -1.07%.

Will Warmer Weather Keep Demand in Check?

The latest forecast from NatGasWeather indicates that warmer-than-normal temperatures will persist across the U.S. through Friday, limiting demand. The southern states are seeing ideal highs in the 60s to 80s, while the northern regions remain mild with highs in the 30s to 50s. A brief cooldown is expected over the Upper Midwest and New England this weekend, but only moderate demand is anticipated Sunday through Monday before demand turns light again.

This mild weather backdrop is likely to suppress natural gas consumption, limiting the market’s ability to sustain upward momentum. For traders, the continued absence of significant heating demand could present bearish opportunities if support levels fail.

How Did the EIA Storage Report Impact the Market?

The U.S. Energy Information Administration (EIA) reported a storage draw of 261 Bcf for the week ending February 21, falling just short of market expectations of 265-267 Bcf. Despite the hefty draw, which far exceeded the five-year average withdrawal of 141 Bcf, prices struggled to rally. The strong wind energy generation and the Presidents Day holiday mitigated what could have been an even larger draw.

Total working gas in storage now stands at 1,840 Bcf, down 561 Bcf from a year ago and 238 Bcf below the five-year average of 2,078 Bcf. The largest regional draw came from the South Central region with a 111 Bcf decline, while the Midwest saw a 70 Bcf drop. While the storage deficit has widened, the lack of near-term weather-driven demand is overshadowing these supportive fundamentals.

Can Natural Gas Prices Break Out of the Current Range?

Natural gas futures struggled to hold gains despite the sizable storage draw. The market is caught between tighter storage balances and soft demand expectations for the upcoming shoulder season. Traders are showing hesitancy as the market transitions away from the winter heating season, typically a period of lower demand.

The 50-day moving average at $3.413 remains a critical level to watch. A break below this could signal a deeper bearish move, while sustained support near $3.733 might spark a short-term bounce. However, without a shift in weather patterns or a fresh catalyst, the path of least resistance could remain to the downside.

Market Forecast: Bearish Bias Prevails

Given the mild weather forecast and the tepid reaction to the EIA’s storage data, the market sentiment leans bearish in the short term. Traders should watch for a potential breakdown toward $3.413 if the $3.733 pivot fails to hold. Unless fresh demand drivers emerge, natural gas prices could continue to grind lower, offering potential opportunities for bearish plays.

More Information in our Economic Calendar.