Looking to the Futures
Natural Gas Slide Continues
Natural gas futures (/NG, currently set for February delivery) traded down to the lowest level since late October on Tuesday before settling at $3.35. Forecasts for warmer weather combined with plenty of gas in storage at the start of withdrawal season served to push down prices. Spot prices tracked the futures with the Henry Hub Record liquified natural gas (LNG) exports are absorbing some of that plentiful supply.
On the weather front, the NOAA has forecasted above-average temperatures for the Great Plains, Midwest and Northeast next week, with only the South near normal. The La Niña-related pattern of colder weather earlier in the season is expected to pause by the end of the month, reducing heating demand over the remaining life of the February contract. Energy traders appear to be confident in a warmer February as well, since the spread between the February and March contracts (/NGG26-/NGH26 - chartable in thinkorswim) has remained relatively constant at around five cents over the past two weeks.
On the storage front, the EIA reported that natural gas in storage ended injection season (April 1st – October 31st) with 3,916 billion cubic feet (bcf) in storage. That number is 4% above the five-year average and the highest since 2016. Injections during the season totaled 2,105 bcf, 11% above the five-year average. The most recent Weekly Natural Gas Storage Report for the week ending December 26 reported a draw of 38 bcf, leaving 3,375 bcf in storage. Natural gas in storage is 1.6% below last year but 1.7% above the five-year average.
A structural change is underway in natural gas as increased domestic production is partially absorbed by higher LNG exports. Through October 2025, the most recent month with totals available, natural gas production was up 3.8% from the prior year, reaching a record 35,788 bcf. Extrapolating those numbers through the end of 2025, production totals may reach 43,000 bcf, compared with 41,424 in 2024. According to LSEG data, LNG exports totaled 111 million metric tons (mmt) in 2025, equivalent to 5,331 bcf, or over 12% of the estimated total production for the year. LNG exports as a whole grew 24% year over year, with the pace accelerating; December set the fifth monthly record for the year, with ships departing with 11.5 mmt or 483 bcf equivalent. LNG exports for this year could grow by another 18% to nearly 6,300 bcf as additional production comes online, primarily on the Gulf Coast.
The one-year continuation chart shows some volatility early in the year followed by relative calm over the spring and summer months. The rally that started in late October was followed by a sharp selloff before consolidation. The contract appears to be near the end of a head and shoulders pattern. The RSI is negative but hasn’t reached oversold levels while the MACD is negative and trending lower.
What else to watch today
Major economic reports, trading events, and news items that could potentially impact specific futures markets:
ADP Employment Change 8:15 AM ET
Business Inventories 10:00 AM ET
EIA Crude Oil Inventories 10:30 AM ET
Factory Orders 10:00 AM ET
ISM Non-Manufacturing Index 10:00 AM ET
JOLTS - Job Openings 10:00 AM ET
MBA Mortgage Applications Index 7:00 AM ET
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