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- Natural Gas Update February 3,2026
Natural Gas--NG is up 3.0 cents at $3.267
NG futures are slightly higher as they are having an inside trading day versus yesterday's price range. The market is likely reassessing whether the market "overshot" to the downside in Monday's selloff with commentary reminding people that winter is not over. Large gas withdrawals from storage will be seen in the coming weeks.
The TTF European futures have gapped down today for the second day in a row, as forecasts for milder weather in the coming weeks weighed on sentiment and concerns over the impact of a massive winter storm in the U.S. eased. However, tight storage levels leave the market vulnerable until the heating season ends, market watchers say. Inventories across the European Union have fallen below 41% of capacity, compared with 53% in the year-earlier period and a five-year average of 57%. Based on the withdrawal rates from the last ten years from now until the end of March, the EU storage level would fall to an average of 24% of capacity at the end of the season. (WSJ/Market News) More notable are the storage levels for some countries within Europe. Germany's gas storage is at 34% capacity, while Dutch reserves dropped to 28% as of the end of January. To reach the mandatory 90% storage target by November 1, 2026, Europe will need to embark on one of the most aggressive and expensive gas-buying campaigns in its history. This will likely keep global gas prices elevated throughout the spring and summer of 2026. (markets.chroniclejournal.com)
Early estimates for this week's EIA gas storage data are calling for a draw of 370 to 379 BCF. That would be a record, as the largest recorded draw is 359 BCF, which was seen in January 2018. Last year saw a draw of 195 BCF and the 5 year average draw for the period is 190 BCF.
Yesterday on the CME, the March NG futures saw Trading at Settlement (TAS) volume of over 54,000 contracts, which is extremely large. The March TAS contract traded up to as high as +10 ticks, which is very unusual. Normally the TAS will trade between flat and plus or minus 2 to 3 ticks in a session. This all suggests to us that there was significant interest to buy March futures on the close on Monday. This is underscored by the fact that the March contract rallied 10 cents between 2:27 and 2:30 PM, which thus includes the 2 minute settlement period.
Notable trades in LN/NG options on the CME from Monday include 5,000 contracts of the March April CSO $1.00/$1.50 call spread trading 1.5 cents. Open interest in the $1.00 and $1.50 calls fell Monday. The March April futures spread settled Monday at 6.4 cents. In the October January CSO, the -$1.25/-$1.50/-$1.75 put butterfly traded 2.6 cents. Also in the October January CSO, the -50 cent call was sold against buying of the -$2.00 put at a cost of 3.0 cents. The October January futures spread settled Monday at -$1.112. The March $5/$7 call spread traded 6.8 cents with .12 delta futures sales at $3.56 included.
Technically, March NG futures settled 25.65% lower Monday. It is the largest one day percentage decline since Friday, Dec. 22, 1995, and the largest one day dollar decline since Tuesday, June 14, 2022. Volume was extremely heavy for the NG futures on the CME at 1,877,418 contracts. Is this suggesting an interim low was made Monday?
Open interest rose by a lot as well. CME NG futures open interest rose by 74,533 contracts with increases seen in the strip from March 2026 to November 2026 and in the January 2027 contract. Is this open interest increase a result of more so new short positions or long positions given the large volume that traded in the last 3 minutes amid the aforementioned rally?
Momentum is negative for the NG futures basis the March daily chart. Support lies below at 3.114-3.125 and then at 3.051. Resistance comes in at 3.390-3.400 and then at 3.476-3.479.
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This article and its contents are provided for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.
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