Natural Gas News: Could the Warming Trend and Bearish Reversal Top Overpower the Arctic Blast?

Natural Gas Futures Retreat from Multi-Month High

U.S. natural gas futures experienced a volatile week, surging to a multi-month high of $4.369 before reversing sharply to settle lower at $3.948. A weekly closing price reversal top at $4.369 has emerged, signaling potential bearish momentum. This reversal reflects how a sudden shift in weather forecasts and profit-taking combined to undercut early bullish sentiment, leaving traders reassessing near-term market prospects.

For the week, natural gas futures settled at $3.948, down $0.041 or -1.03%.

Did Weather Forecasts Fuel the Price Reversal?

Early in the week, natural gas prices rallied on forecasts of an Arctic blast, which was expected to drive temperatures as low as -20°F to 20°F across key U.S. regions, including the Midwest and Texas. The anticipated cold led to heightened heating demand expectations, driving prices to their multi-month high. However, midweek weather model updates introduced a warming trend, with both U.S. and European models projecting fewer heating degree days. This milder outlook prompted traders to lock in gains, triggering a sell-off that reversed the market’s bullish upward momentum​​.

How Are LNG Exports and Domestic Storage Shaping Market Sentiment?

Liquefied natural gas (LNG) exports remain a critical bullish factor. Elevated European demand, driven by depleted storage and colder weather, has kept U.S. LNG exports strong. European inventories are significantly below seasonal norms, with analysts warning of further drawdowns.

Domestically, the Energy Information Administration (EIA) reported a 258 Bcf storage withdrawal, nearly double the five-year average of 128 Bcf. This substantial draw highlights the impact of cold weather in driving residential and commercial heating demand​​.

Yet, U.S. storage levels remain 77 Bcf above the five-year average, providing a buffer against extreme price spikes. This surplus, combined with milder weather forecasts, has tempered bullish momentum. Additionally, seasonal declines in power generation demand and signs of softening LNG flow have further weighed on prices​.

What Does the Weekly Reversal Mean for Traders?

The weekly closing price reversal top at $4.369 is a key bearish technical signal, often indicating a shift to lower prices. The pattern reflects the market’s inability to sustain its rally after hitting the multi-month high. The sell-off was exacerbated by profit-taking and waning weather-driven demand, highlighting how rapidly sentiment can shift when fundamentals and technicals converge.

This reversal also underscores the market’s sensitivity to weather forecasts. As traders often price in expectations weeks in advance, the sudden change in projected heating degree days amplified bearish sentiment, reinforcing the pullback​.

Market Forecast: Caution as Fundamentals and Technicals Align

Natural gas prices face heightened volatility in the near term. The bearish weekly reversal at $4.369, coupled with a warming trend in weather forecasts, suggests the market may struggle to regain upward momentum. If there is follow-through selling pressure, the weakness could extend into the near-term retracement zone at $3.280 to $3.024. However, another Arctic blast or unexpectedly strong LNG demand could reignite buying interest.

Traders should remain alert to shifts in weather forecasts and EIA storage data, which will likely shape the next move. For now, the market leans bearish, with recent events highlighting how quickly technical and fundamental factors can shift market direction.

More Information in our Economic Calendar.