Summary of Recent Market Trends
Natural gas futures experienced a significant reversal on February 6, 2026, as warmer weather forecasts diminished demand, leading to a decline in prices. Despite a record withdrawal of 360 billion cubic feet (bcf) from storage, the market failed to respond positively due to bearish near-term weather predictions.
Key Market Movements
On Friday, March Natural Gas Futures settled at $3.422, marking a decrease of $0.087 or 2.48%. The early session rally was unable to sustain momentum as forecasts of above-average temperatures across the Midwest and South were anticipated to reduce heating demand for natural gas.
Weather Impact on Demand
Traders shifted their focus from the recent cold weather in the Northeast to the expected warming trends nationwide. The cold snap had previously impacted cash prices, but futures traders largely ignored this as they anticipated a return to milder conditions. The Commodity Weather Group indicated that demand would likely remain low through February 20, further contributing to the bearish sentiment in the market.
Storage Withdrawals and Production Concerns
Despite the record storage withdrawal, which was less than the expected 375 bcf, traders showed little enthusiasm for buying. The Energy Information Administration (EIA) reported that natural gas inventories fell to 1.1% below the five-year seasonal average, indicating tighter supplies. However, concerns about rising production levels weighed heavily on prices, with U.S. dry gas production reported at 112.6 bcf/day, a 6.2% increase year-over-year.
Active Rigs and Technical Analysis
The Baker Hughes report indicated an increase in active U.S. natural gas drilling rigs, which rose by five to a total of 130, the highest level in 2.5 years. This surge in rig count raised fears of increased production, contributing to the downward pressure on prices. Technical analysis revealed that the market closed just above the 50-day moving average at $3.401, with potential targets for further declines at the Fibonacci level of $3.284 and the February 2 low of $3.155.
Conclusion
The combination of warmer weather forecasts, rising production levels, and a lack of buying interest following significant storage withdrawals has created a bearish outlook for the natural gas market. Traders will be closely monitoring weather patterns and production data in the coming days to gauge future price movements.