US Natural Prices Steady After Historic Daily Drop

US natural gas futures hovered near $3.3/MMBtu after suffering a dramatic 25.7% collapse on Monday, the steepest one-day drop since 1995. The sharp reversal followed a major shift in weather expectations, with forecasts now pointing to much milder, near-normal temperatures across most of the US through mid-February. This change came after around ten days of extreme cold that had driven heating demand to unusually high levels. As temperatures rise, frozen wells are thawing, allowing gas output to rebound quickly. Daily output recently hit 111.6 bcfd, the strongest since January 20. Even so, the recent cold snap likely led to very heavy storage withdrawals, potentially pushing inventories from above seasonal norms to slightly below average by late January. Meanwhile, LNG export flows remain strong, near record levels, limiting how far prices may fall despite the improving supply picture.

US natural gas futures plummeted 21% to $3.42 per million British thermal units, erasing Friday’s 11.3% surge, as near term weather forecasts shifted toward milder conditions and reduced demand expectations. Forecasts through mid month point to warmer than normal temperatures across large parts of the country, according to the National Oceanic and Atmospheric Administration, which is likely to curb heating and power generation demand. This outlook offset the impact of ongoing frigid conditions in the southern US, where cold weather has prompted power saving efforts. Prices have been highly volatile in recent weeks, with the February contract surging to a three year high before expiring last Wednesday on storm related production disruptions and strong heating demand. The March contract jumped again on Friday following mixed forecasts and a bullish government storage report.

US natural gas futures fell 16.6% to $3.63 per MMBtu on Monday, reversing significant gains from the previous week as forecasts of milder weather conditions across broad areas of the country threatened to curb heating demand. While pockets of the southern US remain cold, the National Oceanic and Atmospheric Administration expects that widespread temperatures will remain above seasonal norms. This shift is expected to dampen demand for natural gas, which remains a critical source for both residential heating and electricity generation. The market has been exceptionally volatile in recent weeks, with February futures soared to a three-year high before expiring last Wednesday, while the March contract spiked again on Friday as traders weighed conflicting weather forecasts against strong government storage figures. Flows to liquefied natural gas export plants rose, boosted by the expected restart of a liquefaction train at Freeport LNG in Texas.