Implications For Near Term Pricing
The recent natural gas storage draw of 38 billion cubic feet was smaller than the 42 Bcf we expected. This points to a looser market than anticipated as the main winter demand season ends. We see this as a clear signal for downward pressure on prices in the near term. We’re seeing continued robust production, with output hovering near 105 Bcf per day, which is keeping the market well-supplied. This, combined with a milder-than-average end to the winter across key heating regions, has significantly curbed heating demand. Looking back from our perspective in 2025, this pattern is reminiscent of the El Niño winter of 2023-2024 which also led to very weak prices. This smaller withdrawal means that total gas inventories will remain significantly above the five-year average, likely by more than 30%. On top of our domestic weakness, European gas storage is also at historically high levels for this time of year, currently sitting near 60% full, which could soften the call on US LNG exports. These factors combined suggest a sustained period of price weakness.Positioning And Trade Expression
Given this supply-heavy backdrop, we should consider establishing or adding to bearish positions. Buying put options on the April or May contracts could be a prudent way to capitalize on expected price declines into the shoulder season. This strategy allows us to define our risk while gaining exposure to the downside as the market digests this oversupply. Create your live VT Markets account and start trading now.
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