Natural Gas News: Will Cooling in the West Offset Milder Weather in the East?

Will Natural Gas Prices Sustain Gains or Face More Selling?

U.S. natural gas futures ended last week higher, settling at $4.399, up 14.74% for the week. However, the rally has shown signs of exhaustion, with prices retreating after a multi-month high of $4.551. Traders are closely monitoring fundamental drivers, including storage deficits, shifting weather forecasts, and trade policy developments, to gauge the market’s next move.

What Impact Did the EIA Storage Report Have on Prices?

The latest EIA report revealed an 80 Bcf withdrawal, well below expectations of 92-94 Bcf. This bearish miss was attributed in part to increased solar power generation, which reduced natural gas demand for electricity. Despite total working gas stocks sitting at 1,760 Bcf—224 Bcf below the five-year average—the smaller-than-expected drawdown pressured prices.

Additionally, European gas storage is at 37% capacity, compared to the five-year seasonal average of 49%, reinforcing global supply concerns. However, U.S. traders remain focused on domestic fundamentals, where inventory tightness continues to underpin long-term price strength.

Could Colder Weather Prevent a Larger Sell-Off?

The latest NOAA forecast for March 17-21 introduced a more bullish factor late last week. The outlook calls for cooler temperatures along the West Coast, while storm systems could help moderate warmth on the East Coast. This shift in expectations sparked short-covering, helping prices recover from early-week losses.

However, the overall forecast remains mixed. While colder systems persist in the northern U.S., milder conditions across the South and East, with highs in the 50s-80s, could limit heating demand. If temperatures trend warmer in subsequent forecasts, natural gas could face renewed selling pressure.

Could Tariffs and LNG Exports Tighten the Market?

Trade policy developments are adding another layer of uncertainty. U.S. tariffs of 10% on Canadian natural gas imports took effect last week, which could put upward pressure on domestic prices as importers adjust. Canada has hinted at retaliatory measures, including a 25% tariff on electricity exports to the U.S., potentially increasing demand for gas-fired power generation.

Meanwhile, LNG exports remain near record highs, with flows to U.S. terminals holding at 15.2 Bcf/d. Additionally, President Trump’s decision to lift restrictions on new LNG export projects could lead to further structural demand growth. The upcoming decision on the Commonwealth LNG facility in Louisiana will be a key development to watch.

Market Forecast: Can Prices Hold Key Levels?

On the upside, taking out $4.551 will reaffirm the uptrend with $4.713 the next target. Although we expect to see new sellers emerge on the first test of this level, it is also a potential trigger point for an acceleration into a major long-term 50% level at $5.627.

However, if the latest NOAA forecast translates into stronger heating demand, traders could see renewed upside potential. Prices could stabilize or push higher if the weather outlook continues trending colder. For now, traders should prepare for continued volatility, with prices likely to remain rangebound unless a fresh catalyst emerges.

More Information in our Economic Calendar.