⬤ U.S. natural gas prices took a nosedive, dropping about 14% in a single session as traders reacted to updated weather forecasts showing warmer conditions ahead. The pullback came after an intense rally sparked by a historic winter storm that had sent prices soaring. The attached chart captures the steep intraday decline, with prices tumbling from the day's highs straight down to session lows.
⬤ The reversal followed a wild few days in the front-month contract. February natural gas had jumped nearly 30% the previous day and rocketed roughly 70% over the past week as brutal cold weather squeezed supply and cranked up heating demand across major parts of the country. That rally was all about fears of production disruptions and sky-high consumption during the storm. But once forecasts started pointing to milder temps, those worries evaporated fast, triggering heavy selling and profit-taking.
The market viewed the cold-driven supply and demand shock as short-lived rather than structural.
⬤ You could see the shift playing out across the forward curve too. While February saw dramatic swings, March was trading way lower around $3.70, showing traders didn't expect the tightness to last. The chart backs this up—prices couldn't hold those earlier gains once the weather-related support faded.
⬤ This sudden move matters beyond just the gas market. It shows how fast weather-driven rallies can flip when forecasts change. Energy markets are incredibly sensitive to these shifts, and sharp corrections like this can ripple through power prices, utility bills, and near-term inflation. The recent volatility is a reminder of how quickly sentiment turns once the underlying supply-demand story gets reassessed, keeping natural gas prone to these kinds of abrupt swings as weather outlooks keep evolving.
