Building on gains over the past 3 sessions, nat gas rallied further yesterday on bullish storage data, declining output and a demand spike. The market extended early session gains following storage data that revealed a slightly larger withdrawal than expected. After rising as much as 20 cents higher on the day, prices retreated back down by the close.
Mar futures settled 6.3 cents higher at $3.628.
Coming in slightly higher than expected, the EIA reported a pull of 100 BCF for the week ended Feb 7, leaving total gas in storage at 2.297 TCF. The draw fell short of the 5 yr avg pull of 144 BCF, narrowing the deficit to 67 BCF while the year over year surplus widened to 248 BCF. The Midwest and East led with draws of 46 BCF and 39 BCF, respectively.
Looking ahead to next week’s report, a larger than normal draw is expected due to the return of much colder than normal temps. Estimates currently range from 205 to 210 BCF, well above last year’s draw of 58 BCF and the 5 yr avg pull of 145 BCF.
Thursday’s 6-10 day outlook from Maxar trended colder yet again, adding another 12.7 HDDs to the forecast. The next 10 days will feature widespread much and strong below normal temps across the Eastern 2/3 of the US, ranking record coldest for the period. The Central US expected to endure the coldest conditions versus normal.
A warming trend is expected to unfold across the Central US during the last week of February while below normal temps begin to ease in coverage and intensity across the East.
The rally continues this morning as the market braces for impacts from the return of freezing cold. Freeze offs are already weighing on output levels while the storage deficit will see a substantial widening over the next 2 weeks.
Technical Analysis
The March 25 natural gas contract rallied up to a 3.786 high on Thursday but was unable to hold onto the early gains.
Late-day selling dropped the contract to a 3.628 daily settle, up .063, a 7th higher close over the past 9 sessions. Volume was heavy at 305,899 contracts, the highest volume day of 2025.
A bearish shooting star Japanese candlestick formed on Thursday but the near term trend remains up.
The March contract closed back under 40 day moving average resistance on Thursday, but this resistance at 3.645 today has been broken in early trade.
Thursday’s 3.786 high is near term resistance followed by 3.840 which is the 61.8% retracement resistance of the January downtrend.
Longer term resistance 4.000 which will close a open gap from late-January followed by the 4.369 January high.
Seasonally, prices historically tend to weaken in late-February/March setting a post-winter low during this timeframe.
Moving Average Alignment – Neutral
Long Term Trend Following Index – Bearish
Short Term Trend Follow Following Index - Bullish
Relative Strength Index -54.56
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