Natural Gas Futures Tumble as Mild Winter Forecasts Emerge

Weather Volatility

The natural gas market has been exceptionally volatile this month. After peaking at over $5.20 due to a cold snap, prices have retreated as long-range weather models flipped to a warmer outlook. This 'demand destruction' has eased storage concerns, as current inventory levels are now viewed as more than sufficient for the remainder of the heating season.

LNG Export Floor

While weather is bearish, the price is being supported by record-high flows to US LNG export terminals. The ability to export surplus gas to global markets provides a structural floor that didn't exist in previous cycles. However, until a sustained freeze occurs in the domestic US market, the upside for Henry Hub futures remains limited.