U.S. natural gas futures declined at the end of the trading week, with the front-month contract settling 2.5% lower at $3.422 per million British thermal units. The move reflected a market grappling with increasing supply signals and a shift toward warmer weather projections that could soften heating demand.
Supply and Weather Pressures Mount
Data from Baker Hughes showed the number of rigs drilling for gas in the U.S. increased by five to 130 last week. Concurrently, average production from the Lower 48 states has edged up to 106.9 billion cubic feet per day so far in February. These supply gains are colliding with a demand forecast that anticipates a significant drop. Analysts project total U.S. gas demand, including exports, could fall from approximately 159.5 bcfd this week to near 132.6 bcfd in two weeks.
The market's focus remains intensely trained on weather models and the upcoming weekly storage report from the Energy Information Administration. Traders are assessing whether storage withdrawals will begin to slow as the temperature outlook moderates.
Mixed Moves for Related Equities
The price weakness filtered through to related securities. The United States Natural Gas Fund, an ETF tracking gas futures, fell about 2%. Individual stocks presented a mixed picture, however. Major producer EQT gained 2.6%, while pipeline operator WMB (Williams) dipped 0.7%. Williams, which is scheduled to report earnings and host an analyst day, has reportedly been evaluating acquisitions of gas-producing assets to secure supply for data center clients.
Looking ahead, market participants are monitoring daily production data and liquefied natural gas export levels. Any sudden shift back to colder forecasts or unexpected supply disruptions could quickly tighten the market balance and force a reversal in the recent price trend.
