U.S. natural gas futures staged a sharp rally on Friday, February 20, 2026, reversing a multi-session decline as shifting weather patterns and looming liquefied natural gas (LNG) export capacity combined to lift market sentiment. The front-month Henry Hub contract for March delivery settled at $3.141 per million British thermal units (mmBtu) during the regular session, a gain of 14.5 cents, or 4.8%, from the prior close. Earlier in the day, prices had dipped as low as $2.951.
Storage Data and Production Context
The rally unfolded despite a weekly storage report that showed a withdrawal slightly below analyst expectations. The U.S. Energy Information Administration (EIA) reported on Thursday that working gas in storage decreased by 144 billion cubic feet (bcf) for the week ending February 13. This left total inventories at 2,070 bcf, which is 59 bcf below levels from the same time last year and 123 bcf below the five-year average. The market had anticipated a larger draw of approximately 148 bcf.
Robust domestic production continues to act as a persistent headwind for prices. According to data from LSEG cited by Reuters, average daily output from the Lower 48 states in February is estimated at 108.6 billion cubic feet per day (bcfd). This figure remains near the record-high levels established in December 2025, underscoring the ample underlying supply in the market.
Key Market Drivers: Weather and LNG
Traders pointed to two primary catalysts for Friday's upward move. First, forecasts indicated a return of colder temperatures across the eastern United States, potentially boosting short-term heating demand. Second, and more significantly for the medium-term outlook, the market is closely monitoring the imminent startup of the Golden Pass LNG export facility.
Exxon Mobil CEO Darren Woods confirmed during the company's recent earnings call that first LNG production from the Golden Pass project—a joint venture with QatarEnergy—is expected in "very early March." This long-awaited facility represents a major new source of demand for U.S. natural gas, as it will pull significant volumes from the domestic market for conversion and export.
"The market is balancing near-record supply against the prospect of a late-winter cold spell and a major step-up in LNG demand," noted one analyst. The leveraged natural gas ETF, BOIL, surged roughly 8% on the day, reflecting the bullish momentum, while its inverse counterpart, KOLD, fell by a similar magnitude.
Trader Positioning and Analyst Commentary
Market participants reported active short-covering ahead of the weekend, as traders who had bet on further price declines moved to close their positions in the face of changing fundamentals. James Hyerczyk, an analyst at FXEmpire, observed, "It appears that short sellers were covering ahead of the weekend," highlighting weather and LNG export demand as the central themes driving activity.
The rally highlights the market's sensitivity to the transition into the spring "shoulder season," the period between peak winter heating demand and summer cooling needs. The risk of a price slump remains if late-February and early March weather turns milder than expected while production holds strong. Such a scenario could leave the market oversupplied with limited immediate catalysts to support prices.
Looking Ahead
Attention now turns to the next set of catalysts. The EIA will release its subsequent weekly storage report on Thursday, February 26. Traders will also scrutinize any updates on feedgas flows into the Golden Pass terminal as the reported early-March startup window approaches, along with final winter weather developments. The interplay between these factors—domestic production, export demand, and inventory levels—will determine whether Friday's rally marks a sustained reversal or a temporary rebound in a longer-term range-bound market.
