Warmer Weather Forecasts Suppress US Natural Gas Prices

The cold wave sweeping the southern United States has passed, and with changing atmospheric conditions, the energy markets are now facing new pressures. Data from Jin10 shows a significant shift in supply and demand expectations, with national weather forecasts becoming a key factor in changing price momentum.

Price Surge Triggered by Previous Extreme Weather

In early trading sessions last week, extreme cold conditions in the U.S. drove natural gas futures up 11%, reaching a strong bullish momentum. Heating demand surged dramatically as temperatures plummeted, creating tight pressure on regional energy supplies.

NOAA Forecast Signals Market Direction Change

The National Oceanic and Atmospheric Administration (NOAA) has released the latest forecast indicating temperatures will return to normal and even above-average levels for the same period last year. This marks a turning point for the market, with traders beginning to adjust their positions in anticipation of more moderate weather conditions in the coming weeks.

Selling Pressure and Price Adjustments

Facing warmer forecasts, the nearest-month natural gas contracts experienced a sharp decline of 17%, falling to $3.620 per million British thermal units during early Asian market trading. This correction wiped out all gains from the previous rally, reflecting the market’s quick reaction to weather information.

Impact on Short-Term Energy Demand

With temperature forecasts indicating above-normal conditions across most of the U.S., demand for natural gas in residential and commercial heating is expected to decrease significantly. This impact affects not only the heating sector but also power generation using natural gas, where demand response will become more elastic as weather conditions lighten.

Rapid changes in weather forecasts demonstrate high volatility in the energy markets, requiring investors to continuously monitor meteorological developments to anticipate the next price movements.