Natural gas futures experienced a significant drop on January 27, 2025, as weather forecasts reduced the expected cold for the upcoming weeks, leading to a decrease in demand. The February Nymex natural gas futures contract fell by 26.5 cents to $3.762/MMBtu in early trading. This decline is attributed to the diminishing impact of a recent polar vortex and the anticipation of a major winter storm that is expected to bring heavy snow and rain to various parts of the U.S., including the Southwest, Plains, and Gulf Coast. The storm's potential to alter weather patterns as February begins has further pressured natural gas prices downward.
Additionally, the market is reacting to a projected 317 billion cubic feet (Bcf) withdrawal from gas storage for the week ending January 24, which could eliminate the gas inventory surplus over the five-year average. Despite this, record production levels in Canada and the resumption of operations at Freeport LNG's Texas facility are expected to increase the flow of gas to liquefied natural gas export plants, adding to the supply side pressures. These factors combined have contributed to the bearish sentiment in the natural gas market.
The ProShares UltraShort Bloomberg Natural Gas ETF (KOLD) rose to $36.14, marking a 10.59% increase as of 10:00 AM ET on January 27, 2025.