Selling NG through end of February amid weaker demand

Anemic demand is currently keeping natural gas (NG) prices near a four-month low of $3.235. Such a decline is driven by forecasts of abnormally mild weather across the eastern states through the end of February. Consequently, there will not be much need for heating during this period, and energy reserves are likely to go largely untapped in the coming weeks.

The imbalance issue is starting to boil, as supply keeps growing while demand remains weak. Gas production in the lower 48 American states sees record highs. Moreover, the US Energy Information Administration (EIA) has revised its outlook for NG output in 2026 upward.

The situation is getting slightly better due to elevated inflows to liquefied natural gas (LNG) export terminals, which absorb a portion of the domestic production. However, this is far from a long-term solution. China hasn’t directly imported raw materials from the US for a year, diverting volumes to Europe instead of creating new demand. Meanwhile, some EU countries are actively seeking to reduce their reliance on American suppliers. All in all, the US export channel remains operational, but it is not expanding, limiting the country's ability to offset pressure from record domestic production.

A brief cold front expected February 21-25 could trigger a technical rebound. However, this is unlikely to shift the broader outlook, as investor attention remains fixed on the warming trend forecast after February 25. Market sentiment is clearly turning bearish.

On the daily chart (D1), NG futures continue their steady descent following a recent peak at $5.665 on January 30. The Chaikin Oscillator, despite still being in positive territory, is distancing itself from previous highs, reflecting a shift in forces toward sellers. The Stochastic Indicator paints the same picture, with both of its lines (%K=18, %D=20) sitting in the oversold zone. A short-lived rebound is highly likely, but nothing more. Besides, with bears stirring the wheel, the oscillator may hold in the red for an extended period, potentially generating false buy signals.

Take a look at the following trading strategy:

Sell NG at the current price, with Take profit at $2.800 and Stop loss at $3.620.

This forecast remains relevant between February 19 and February 27, 2026.