Natural Gas News: Traders Turn Bearish as Warm Weather Weighs on Prices

Will Warmer Weather Derail the Natural Gas Rally?

U.S. natural gas futures have pulled back on Wednesday after touching a multi-month high of $4.901 on Monday. Profit-taking and bearish weather forecasts are pressuring prices, despite tight storage and moderate production growth. Traders are assessing whether the uptrend can resume or if further downside is imminent.

At 12:06, U.S. Natural Gas Futures are trading $4.292, down $0.161 or -3.62%.

Is Weather Cooling Off Bullish Momentum?

Forecasts for unseasonably warm temperatures in mid-March are reducing heating demand expectations. Atmospheric G2 predicts above-normal temperatures in the northern and western U.S. from March 16-20, limiting demand. Similarly, NatGasWeather reports that large portions of the interior U.S. will see highs ranging from the upper 50s to the 80s, further curbing consumption.

Despite weak short-term demand, storage remains below historical levels. BloombergNEF projects U.S. natural gas inventories will be 10% below the five-year average by summer, while the latest EIA data shows current storage is already 11.3% under its seasonal norm. This tightness could provide support if demand conditions improve.

Is Production Too Weak to Sustain a Sell-Off?

Lower-48 dry gas production stands at 106.0 Bcf/day, marking a 2.7% year-over-year increase. However, demand has softened, falling 4.4% from last year to 77.2 Bcf/day. LNG exports have also edged lower, with flows to terminals dipping to 14.9 Bcf/day.

The latest EIA storage report was bearish, showing a withdrawal of just 80 Bcf—below both the expected 93 Bcf draw and the five-year average of 94 Bcf. This suggests demand is not yet strong enough to meaningfully tighten supply. However, Baker Hughes data indicates a slight decline in active gas rigs, signaling restrained production growth that could provide long-term price support.

Can LNG Expansion Drive a Sustained Recovery?

A bullish long-term catalyst is the potential expansion of LNG exports. The Trump administration is expected to approve the Commonwealth LNG export facility in Louisiana, which would boost U.S. export capacity and tighten domestic supply. Meanwhile, President Trump has lifted the Biden administration’s pause on LNG project approvals, opening the door for additional demand growth.

Market Outlook: Where Do Prices Go Next?

Natural gas prices are hovering around a key pivot at $4.322. A sustained move above this level could trigger a short-covering rally, with resistance at $4.901 and a breakout target of $5.627. However, a decisive move below $4.132 would signal a shift in momentum, with downside targets at $3.924 and $3.742.

Short-term price action hinges on weather-driven demand and trader sentiment. If mild temperatures persist, bearish pressure could build. However, tight storage and potential LNG expansion remain supportive factors that could limit the downside.

More Information in our Economic Calendar.