Vlad Demochko
⬤ US natural gas futures saw a dramatic intraday turnaround on January 28 after an incredible run earlier in the month. Prices dropped more than 15 percent to around $5.90 per million British thermal units, following a historic weekly surge that ranged from 70 to 117 percent. The earlier rally was fueled by brutal Arctic conditions and Winter Storm Fern, which squeezed supply expectations and triggered aggressive speculative buying.
⬤ The chart reveals natural gas prices shooting up rapidly before hitting a wall at elevated levels. Futures climbed from the low $3 range to above $4.80 per MMBtu in just days, reflecting a massive short squeeze in thin trading conditions. The pullback came as temperatures eased slightly, prompting traders to cash in on gains after the extreme move rather than indicating any real collapse in demand.
⬤ Supply concerns remain a factor. The Energy Information Administration cut its US natural gas production forecasts for 2026 due to weather disruptions. This revision confirms that the intraday selloff was about positioning and profit-taking, not a fundamental change in supply or consumption. The chart backs this up, showing prices holding well above pre-weather shock levels.
⬤ This episode shows just how volatile natural gas markets can get during severe weather. Sharp reversals after parabolic runs can flip short-term dynamics and sentiment on a dime, even when supply risks are still present. Natural gas keeps proving its reputation for sudden, dramatic price swings that catch traders off guard and keep the energy sector on edge.
Vlad Demochko
