Natural Gas Market Note | 02.02.2026
Natural gas prices reverse sharply lower with warmer weather on the horizon.
Volatility continued on Monday in the natural gas futures market, but price action moved sharply in the opposite direction of recent weeks. The prompt-month March 2026 contract finished down $1.12 per MMBtu from Friday’s settlement, giving up all of last week’s gains and then some. Summer 2026 followed suit, shedding 75 cents to fall back below $3.50 per MMBtu after ending last week firmly above the $4.00 mark.
Temperature forecasts for the middle of the month shifted significantly warmer over the weekend, leading the market to gap lower at the open on Sunday evening. As the warmup was further reinforced by additional model runs, downside momentum persisted throughout the day, with most of the curve settling near intraday lows. Cooler-than-normal weather is still expected to hold through this week, though with less intensity than what was observed last week and over the weekend. Beyond that, the market is now pricing in a mid-month stretch of warmer-than-normal conditions.
Today’s price action effectively hit the reset button, pulling contracts through next winter back to levels seen two weeks ago, prior to the bulk of the rally. While end-of-season storage inventories are still expected to finish materially lower than projections made before the recent cold event, updated forecasts are giving the market confidence that an extended stretch of aggressive drawdowns is unlikely.
All that said, price volatility will likely continue as the market works through the heart of the winter season, but Monday served as a reminder that volatility cuts both ways.
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