Natural Gas News: Tariffs and Cold Weather Fuel Bullish Market Sentiment

Will Tariffs and Cold Weather Keep Natural Gas Futures Elevated?

Natural gas futures surged Monday as traders reacted to new tariffs imposed by President Trump on Canadian and Mexican energy imports. The 10% tariff on Canadian natural gas has raised concerns about supply constraints, while colder weather forecasts have also contributed to bullish sentiment.

After briefly dipping below the key $3.00/MMBtu level, March natural gas futures rebounded sharply, driven by bargain hunting and supply-side concerns. Last week, the front-month contract dropped 38.3 cents week-over-week, but Monday’s rally suggests a shift in sentiment as traders reassess supply risks and demand expectations.

At 15:17 GMT, Natural Gas Futures are trading $3.313, up $0.269 or +8.48%.

How Are Tariffs Impacting Natural Gas Prices?

The U.S. imports 5–7% of its daily gas supply from Canada, making the new tariffs a significant cost factor. Analysts estimate the 10% tariff adds about $0.20/MMBtu to Canadian imports, pushing up Henry Hub prices as a result.

Additionally, U.S. dry gas production remains constrained due to low rig counts. Many gas basins have operated with minimal drilling activity since early 2023 due to suppressed prices. With limited ability to offset reduced Canadian imports, the market is pricing in a tighter supply scenario, especially in the West and Midwest.

Mexican oil exports are also affected, with a 25% tariff further disrupting North American energy flows. Analysts estimate that Canadian gas exports to the U.S. could drop by 0.16 billion cubic feet per day, adding another layer of supply uncertainty.

Is Weather Playing a Role in the Rally?

Colder weather forecasts are reinforcing the bullish momentum. Initial February projections indicated a mild start, but over the weekend, models adjusted to show a return to near-normal temperatures by mid-month. This shift has increased expectations for additional heating demand.

The latest Energy Information Administration (EIA) report also added to bullish sentiment, showing a massive 321 Bcf storage withdrawal due to January’s extreme cold. This draw exceeded both last year’s levels and the five-year average, tightening inventories at a time when traders are already concerned about potential supply constraints.

What Key Levels Should Traders Watch?

Support remains at the 50-day moving average of $2.998, which helped stabilize prices when the market dipped to $2.990 on Friday. If this level breaks, downside pressure could extend toward the 200-day moving average at $2.697.

On the upside, the short-term range of $4.020 to $2.990 places the 50% retracement level at $3.505 as the next key resistance. A break above this level could signal further gains, particularly if supply concerns persist.

Market Outlook: Bullish Momentum Could Extend

With tariffs driving supply concerns and colder weather adding demand pressure, the near-term outlook for natural gas remains bullish. The market’s ability to hold above key technical support levels suggests further upside potential, especially if additional cold weather patterns materialize. Traders should watch for confirmation of sustained demand strength and any further policy shifts that could impact North American energy flows.

More Information in our Natural Gas Futures.