Natural Gas News: Warmer Weather Set to Pressure Market This Week, Demand Fades

Can Natural Gas Recover After Last Week’s Decline?

U.S. natural gas futures settled at $3.834 last week, down 8.5%, as forecasts for above-normal March temperatures weighed on the market. The decline followed a February rally driven by tight storage levels, but warmer weather is now curbing heating demand, leading to price weakness.

Will Warmer Weather Keep Prices Under Pressure?

Weather forecasts remain a primary bearish driver. Maxar Technologies predicts above-normal temperatures from the Rockies to the Atlantic from March 10-14, limiting heating demand. With the winter season winding down, demand concerns are intensifying, adding pressure to the market.

Despite colder conditions earlier in February contributing to a significant inventory draw, the latest trends suggest a return to weaker consumption. Lower-48 state gas demand fell to 80.2 Bcf/day last Friday, a 10.3% year-over-year decline. Unless a late-season cold spell emerges, traders may struggle to find strong bullish catalysts in the near term.

How is Supply and LNG Demand Affecting the Market?

Production remains robust, with Lower-48 dry gas output at 107.8 Bcf/day, up 2.8% from last year. At the same time, LNG exports continue to provide some support, with flows to U.S. export terminals at 15.6 Bcf/day, a 2.1% week-over-week increase.

A long-term bullish factor emerged with the Trump administration lifting the Biden-era pause on approving new LNG export projects. Bloomberg reported that a decision on the Commonwealth LNG facility in Louisiana is nearing, which could eventually boost U.S. natural gas demand. However, in the short term, storage and weather are dominating price action.

Did Storage Data Offer Any Relief?

Last week’s EIA report showed a 261 Bcf storage draw for the week ending February 21, smaller than the expected 271 Bcf but still well above the five-year average of 141 Bcf. Total working gas in storage now stands 11.5% below the five-year average, signaling tighter supplies.

While storage levels remain supportive, the lack of immediate demand has kept the market from rallying. Even with inventories below historical norms, traders are hesitant to push prices higher without a weather-driven demand boost.

Market Forecast: Bearish Bias Persists

With warmer-than-normal weather limiting demand, the short-term outlook remains bearish. The key pivot at $3.733 is critical—if it breaks, the market could test $3.413, where buyers may attempt to step in.  If that fails then look for a plunge to $2.932 to $2.675, Inside this retracement zone is the 52-week moving average at $2.748, a major trend indicator.

On the upside, any rally will need fresh catalysts, such as unexpected cold or stronger LNG export demand, to sustain momentum.

For now, traders should prepare for continued downside risk, with potential selling opportunities if support levels fail.

More Information in our Economic Calendar.