Key Moments
- March natural gas futures are trading at $3.290, modestly higher after a sharp weather-driven selloff pushed prices below $4.00.
- Meanwhile, U.S. natural gas output has recovered to 111.6 bcf/day as warmer temperatures ease freeze-offs. Production could approach a record high.
- Futures have slipped beneath both the 50-day and 200-day moving averages. These technical levels now act as resistance.
Market Overview
U.S. natural gas futures are stabilizing in early Tuesday trading after a steep decline at the start of the week. However, both fundamental and technical factors continue to weigh on sentiment.
At 13:53 GMT, March Natural Gas is quoted at $3.290, up $0.053 or +1.64%. Traders are reassessing the impact of shifting weather expectations and recovering production.
Weather Shift Sparks Monday Selloff
Monday’s slide was triggered by weekend forecasts showing a notable warming trend across much of the United States during the second week of February. As a result, the front-month contract opened lower and fell below the $4.00 threshold.
According to NatGasWeather for February 2-8, “Chilly weather systems will sweep across the Midwest, Ohio Valley, and Northeast with highs of 10s-30s. Most of the western and southern U.S. will be mild and dry with highs of 40s-70s. Overall, national demand will be high the next 6 days, then moderate.”
The Commodity Weather Group echoed this view, noting that the 10-day U.S. forecast had turned warmer. This change could curb heating demand. In particular, the 10- to 15-day window is crucial for professional futures participants, making the shift important for price discovery.
Output Recovers as Freeze-Offs Ease
The recent weather pattern has also influenced supply. Last Wednesday, front-month futures surged to a 3-year high amid an Arctic blast tied to a polar vortex. Widespread wellhead freeze-offs in Texas and other regions removed about 50 billion cubic feet of supply, or roughly 15% of total U.S. production.
As temperatures moderated, U.S. natural gas production rebounded, climbing to 111.6 bcf on Monday—the highest level in nearly two weeks. Meanwhile, active U.S. natural gas rigs have reached a 2-year high. If conditions remain supportive, output could approach record territory.
| Market/Supply Metric | Latest Value | Context |
|---|---|---|
| March Natural Gas Futures Price | $3.290 | Up $0.053 or +1.64% at 13:53 GMT |
| Recent High Impact Event | 3-year high last Wednesday | Driven by Arctic blast and polar vortex |
| Production Loss During Freeze-Offs | ~50 bcf | Approximately 15% of U.S. output offline |
| Current U.S. Gas Production | 111.6 bcf/day | Highest in nearly two weeks |
Storage Data in Focus After Prior Bullish Draw
Attention now turns to the upcoming government storage report due Thursday, covering the week ending January 30. Analysts expect a substantial withdrawal tied to the recent extreme cold.
The previous release, for the week ending January 23, showed a 242 bcf draw. This exceeded both the consensus estimate of 238 bcf and the 5-year average decline of 208 bcf. Traders will watch whether the current storage surplus shifts to a deficit. While this may have limited near-term impact absent another cold outbreak, a move into deficit could affect summer pricing dynamics.
Technical Backdrop Turns Negative
From a technical standpoint, the daily swing chart points to a downside trend in March natural gas. Prices are below the 50-day moving average at $3.423 and the 200-day moving average at $3.777, turning these levels into resistance.
Futures are also positioned below a key retracement zone between $3.284 and $3.502, reinforcing a bearish tone. With warmer forecasts over the next 10 days and prices under major moving averages, the near-term bias has shifted to cautiously bearish. However, winter weather can still change quickly and bring volatility.
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