Natural Gas News: Futures Rebound as Colder Weather Drives Market Sentiment

Natural Gas Futures Reverse Losses as Weather Uncertainty Lingers

Natural gas futures reversed early losses on Friday, recovering into positive territory as traders evaluated updated weather forecasts and storage projections. Shifting expectations for colder conditions in early February, combined with strong LNG demand, helped support prices into the weekend.

On Friday, U.S. Natural Gas Futures settled at $4.027, up $0.082 or +2.08%.

Did Weather Updates Drive the Late Recovery?

Natural gas prices opened lower Friday, pressured by a bearish EIA storage report and mild weather forecasts for the start of February. However, midday updates introduced the possibility of colder air spreading across the northern U.S. from February 5-7, lifting prices late in the session.

While weather models remain inconsistent, traders are focused on whether these colder trends will materialize, as they could sustain strong heating demand. NatGasWeather.com noted very strong demand through Friday due to frigid conditions across the interior U.S. but expects demand to ease starting next week as milder systems arrive in the South and East.

What Role Did Storage Data Play in Price Movements?

The EIA reported a 223 Bcf storage withdrawal for the week ending January 17, falling short of expectations. This left storage at 2,892 Bcf, slightly above the five-year average by 21 Bcf but 57 Bcf below last year’s levels.

Despite this smaller-than-expected draw, analysts are projecting a significant withdrawal exceeding 300 Bcf in the next report. Such a reduction could push storage from a slight surplus into a deficit near 100 Bcf, creating additional upward pressure on prices if weather trends colder.

Are European Gas Markets Providing Support?

European natural gas prices remain elevated, with the Dutch TTF benchmark trading near €48.37 per megawatt-hour after hitting €50 earlier in the week. Concerns over depleted storage and reliance on LNG imports are keeping prices supported, despite a slight pullback on Friday.

EU storage levels are now at 57.6% capacity—well below last year’s 74% and the five-year average of 66%. The market remains tight as Europe navigates reduced Russian pipeline supplies and increasing LNG demand. This global demand for LNG continues to support U.S. feedgas levels, helping offset some production recovery following recent freeze-offs.

Market Forecast: What’s Next for Natural Gas?

Natural gas futures are set for potential volatility heading into next week. If colder weather trends solidify for early February, prices could see additional upside, particularly with the expected large storage draw lending support.

However, inconsistent weather forecasts and milder conditions in key regions could limit gains. Traders should monitor updated models closely, as the market remains highly sensitive to shifting weather expectations. For now, the short-term outlook leans cautiously bullish, contingent on colder trends confirming by mid-February.

More Information in our Economic Calendar.