Natural Gas News: Will the EIA Storage Report and Early March Cold Extend the Rally?

Natural Gas Futures Hold Gains as Cold Weather and Supply Tightness Support Market

U.S. natural gas futures ended last week at $4.234, up 13.66%, as traders balanced strong heating demand with supply concerns. The market’s strength comes amid a frigid Arctic blast and tight storage conditions, with colder weather expected into early March, keeping volatility high.

Will Cold Weather Continue to Boost Natural Gas Demand?

Natural gas prices have surged as the Polar Vortex grips much of the U.S., driving heating demand to exceptional levels. The cold front, which brought temperatures as low as -20s across the central and eastern states, pushed national gas consumption to 122.8 Bcf/day, a 43.3% year-over-year increase​.

While national demand is expected to remain strong through the weekend, a shift to warmer temperatures could soften demand early next week. However, updated forecasts now show colder-than-expected weather could return from February 26 through early March, potentially sustaining price support​.

How Tight Are Natural Gas Storage Levels?

Storage conditions remain a critical factor in supporting natural gas prices. The U.S. Energy Information Administration (EIA) reported a storage draw of 196 billion cubic feet (Bcf) for the week ending February 14, exceeding expectations of 193 Bcf and the five-year average of 145 Bcf​.

Current inventories are now 5.3% below their five-year seasonal average—the tightest supply scenario in over two years​. With forecasts pointing to sustained cold, traders anticipate further drawdowns, which could keep prices elevated in the near term.

Will LNG Exports Add to Market Tightness?

Liquefied natural gas (LNG) exports remain a bullish factor. Feed gas flows to export terminals hit 16 Bcf/day last week, up 5.5% from the previous week​. The Trump administration’s decision to lift restrictions on new LNG export projects could further tighten domestic supply.

Increased export capacity, including the potential approval of the Commonwealth LNG facility in Louisiana, would boost international demand for U.S. natural gas, adding upward pressure to prices​.

Can Production Keep Up with Surging Demand?

U.S. natural gas production continues to lag behind soaring demand. Lower-48 state dry gas production stood at 102 Bcf/day, down 3.4% year-over-year​. Meanwhile, demand remains robust, driven by heating needs and higher electricity consumption.

The Edison Electric Institute reported a 10.9% increase in U.S. electricity output for the week ending February 15, highlighting strong utility-driven demand​. With only 99 active natural gas drilling rigs in operation, a meaningful increase in production appears unlikely in the short term​.

Market Forecast: Cautiously Bullish with High Volatility Ahead

The natural gas market remains in bullish territory, supported by tight storage, strong LNG exports, and ongoing cold weather. Forecasts for another cold spell into early March could provide continued support.

Traders should watch for a move above $4.476 as a bullish signal, with potential resistance at $4.757. Conversely, a break below $4.020 could trigger a pullback toward $3.733​. Overall, the outlook is cautiously bullish, with high volatility likely as weather and supply factors unfold.

More Information in our Economic Calendar.