Natural Gas News: Futures Dip as Traders Shrug Off 174 Bcf Inventory Decline

Natural Gas Futures Slip as Storage Report Shows Larger-Than-Expected Draw

U.S. natural gas futures edged lower on Thursday following the release of the latest EIA storage report, which showed a 174 Bcf draw for the week ending January 31. This exceeded some pre-report estimates but fell in line with the five-year average withdrawal. With the market consolidating for four straight sessions, traders are weighing the potential for further downside against an anticipated rise in demand next week.

At 15:57 GMT, Natural Gas Futures are trading $3.319, down $0.041 or -1.22%.

Is Storage Tight Enough to Support Prices?

Total working gas in storage now stands at 2,397 Bcf, which is 208 Bcf lower than the same period last year and 111 Bcf below the five-year average. While this signals a tightening supply picture, inventories remain within the historical range, limiting immediate bullish pressure.

Regionally, the largest drawdowns occurred in the Midwest (-56 Bcf) and South Central (-47 Bcf), reflecting stronger heating demand in those areas. The East pulled 45 Bcf, while smaller declines were recorded in the Pacific (-16 Bcf) and Mountain (-12 Bcf) regions. Notably, the South Central salt storage saw a sharper decline of 12 Bcf, highlighting potential volatility in near-term supply balances.

Weather Signals Mixed Demand Ahead

Current weather patterns show a divided U.S., with the northern third experiencing frigid temperatures and snow, while the southern two-thirds remain mild. NatGasWeather projects light national demand through the weekend but anticipates a sharp increase to high demand levels next week as colder air pushes southward.

This shift could provide some support for prices, particularly if colder trends persist beyond mid-February. However, the market remains cautious, as recent mild conditions have kept withdrawals in line with seasonal expectations rather than triggering a sustained price breakout.

Technical Levels Define Near-Term Direction

Natural gas futures have been consolidating roughly 20 cents below resistance at $3.505. On the downside, technical support is emerging near the 50-day moving average, with last week’s low at $2.990 and a short-term pivot at $2.932. A break below these levels could open the door for further declines, especially if the market perceives storage levels as adequate despite recent draws.

Conversely, any move above $3.505 could trigger fresh buying, particularly if updated forecasts extend the colder outlook into late February.

Market Outlook: Bearish Near-Term, Watching for Next Week’s Demand Spike

In the short term, natural gas prices remain under pressure due to mild current demand and technical resistance. However, next week’s forecasted rise in heating demand could introduce upside risk, especially if storage withdrawals accelerate.

Traders should monitor weather updates and technical levels closely, as any break above $3.505 or below $2.990 will likely dictate the next directional move. Until then, the market remains in consolidation mode, with a slight bearish bias.

More Information in our Economic Calendar.