Natural Gas News: Natural Gas Futures Jump, But Market Faces Resistance

March Natural Gas Surges Nearly 3% on Cold Snap but Rally Is Likely Short-Lived

March natural gas futures are up nearly 3% on the weekly chart on Monday on short-covering due to extremely cold and snowy conditions in the Northeast. The three-day cold snap is predicted to drive up demand, further widening the current supply deficit.

Storage Deficit Growing but Production Rise Should Close the Gap by Summer

As of last Thursday’s weekly EIA storage report, natural gas inventories were already down 1.5% in 2026 and 5.6% below their five-year average. This is currently not a major deficit, but it is expected to grow over the next few days with the high demand from the East Coast storm. However, with production on the rise and expected to continue due to improving weather conditions in March, the deficit should close by the summer cooling season.

Record Production and 2.5-Year High in Active Rigs Give the U.S. Plenty of Firepower

On Friday, production stood at 113.4 Bcf/day, or 12.5% higher year-over-year, according to BNEF. Furthermore, according to the latest data from Baker Hughes, the number of active U.S. natural gas drilling rigs is at a 2.5-year high of 133 rigs. This will give the U.S. plenty of capacity to fill the deficit before it starts getting hot. This is the main reason a rally this late in the winter season and ahead of the spring shoulder season will be short-lived and sold by hedgers.

LNG Export Demand Could Prevent a Price Collapse Despite Bearish Seasonal Shift

Despite the call to sell the rally and the eventual filling of the current supply deficit, a crash in prices due to strong production is unlikely. Heating demand will begin to soften over the next several weeks and cooling demand should be light, but propping up the market may be a jump in LNG production. As of Friday, estimated LNG net flows to U.S. LNG export terminals were 19.8 Bcf/day, up 1.5% week-over-week, according to BNEF.

The International Energy Agency (IEA) is also predicting the rapid expansion of LNG supply from North America. The IEA claims that a surge in LNG will play a major role in rebalancing global gas markets in 2026, leading to stronger demand growth after a drop in 2025.

Technical Outlook: New Minor Bottom at $2.922 but Trend Remains Down

March natural gas futures have formed a new minor bottom at $2.922 on the weekly chart, but the move has not been strong enough to change the trend to up or even shift momentum to the upside. Furthermore, the market is still facing key headwinds at the $3.502 pivot level, while remaining well below the 50-day moving average at $3.783 and the 200-day moving average at $4.017.

When combined with the upcoming bearish seasonal shift, this chart pattern tends to attract sellers so I have to conclude that we’re still in “sell the rally” mode.

More Information in our Economic Calendar.