Natural Gas Prices Rally on Divergent Weather Pattern Chart Across US Regions

March Nymex natural gas futures (NGH26) closed higher by +0.074 (+2.29%) on Tuesday, recovering some ground after Monday’s sharp 25% selloff. The bounce reflects a complex weather pattern with contrasting temperature forecasts emerging across different regions of the country. The Commodity Weather Group outlined a mixed outlook: above-normal temperatures expected through mid-February in the Midwest and southern regions, while the mid-Atlantic and Northeast face colder-than-normal conditions through early February. This divergent weather chart has become crucial for understanding short-term price movements.

Temperature Divergence: Reading the Weather Symbols Across Regions

The dramatic rally in natural gas prices that occurred last Wednesday demonstrates the outsized impact of extreme weather events. An Arctic cold front that swept across the nation triggered massive operational disruptions, with approximately 50 billion cubic feet of natural gas production coming offline—roughly 15% of total US output. The freeze damaged gas wells and caused production interruptions particularly in Texas and neighboring regions, while simultaneously spiking demand for heating purposes.

The weather forecast divergence is critical because regional temperature differences create uneven supply and demand dynamics. When the Northeast experiences abnormally cold temperatures, heating demand surges in densely populated areas. Conversely, warmer weather in the South reduces emergency heating consumption. This temperature chart pattern, projected through mid-month, will likely influence daily price direction.

Supply and Production Dynamics

Lower-48 dry gas production on Tuesday registered 110.5 bcf/day, reflecting a +5.1% year-over-year increase, according to BNEF data. Despite recent growth, the EIA revised its 2026 production forecast downward to 107.4 bcf/day from the prior estimate of 109.11 bcf/day, signaling analyst concerns about future output growth. Notably, US natural gas production remains near record highs, with active drilling rigs recently posting 2-year peaks.

Baker Hughes reported that active US natural gas drilling rigs reached 125 in the week ending January 30, up 3 from the prior week. This remains modestly below the 2.25-year high of 130 rigs set in late November but represents substantial gains from the 4.5-year low of 94 rigs recorded in September 2024.

Demand Metrics and Market Absorption

Lower-48 state gas demand on Tuesday was 110.6 bcf/day (+26.7% year-over-year), according to BNEF. LNG export activity showed strength, with net flows to US LNG terminals estimated at 19.1 bcf/day (+43.8% week-over-week), suggesting robust international demand despite global economic uncertainties.

However, broader electricity generation presented a headwind. The Edison Electric Institute reported that US electricity output in the week ended January 24 fell 6.3% year-over-year to 91,131 GWh. While the weekly figure disappointed, the 52-week cumulative output rose 2.1% year-over-year to 4,286,060 GWh, confirming underlying strength in power demand.

Inventory Status and Regional Supply Positioning

Last Thursday’s EIA weekly inventory report provided support for prices. Natural gas inventories for the week ended January 23 declined by 242 bcf—exceeding the market consensus draw of 238 bcf and surpassing the 5-year weekly average draw of 208 bcf. As of January 23, total inventories sat 9.8% above year-ago levels and 5.3% above their 5-year seasonal average, indicating ample supplies remain in the system.

The inventory chart tells an important story: despite adequate supplies, regional variations matter. European gas storage as of February 1 stood at just 41% capacity compared to the 5-year seasonal average of 57% for this period, suggesting tighter supply conditions globally even as the US maintains comfortable inventory buffers.

Market Outlook and Price Direction

The conflicting signals evident in the weather forecast chart—warm temperatures in some regions paired with Arctic conditions in others—will likely keep natural gas prices volatile through mid-February. Production forecasts have been pared back by the EIA, supply disruptions from the recent cold snap remain fresh in market memory, and export demand continues strengthening. These factors support prices near current levels, while abundant US inventory levels temper excessive rally enthusiasm.

The interplay between regional temperature patterns, production capacity constraints, and adequate but uneven inventory distribution will remain critical price drivers in the near term.