The March NYMEX natural gas futures contract settled 6.2 cents higher for the holiday shortened trading week and the contract expired at $2.451 on Friday. The March contract has been in a period of price consolidation over the last two weeks. The contract briefly broke out of this trend and traded to a low of $1.967 on Tuesday before buyers swooped in to buy up the contract at that price level and eventually pushed it 25% higher later in the week by expiration.

For the week ending 2/17, the EIA reported a withdrawal of 71 BCF. This was slightly higher than the market estimate of 66 BCF. Storage inventories now stand at 2,195 BCF which is 21.9% higher than last year's level and 15.2% higher than the previous 5-tear average. The lack of sustained cold in major consuming regions has allowed storage levels to flip flop quickly from being at steep deficits to the year ago and 5-year benchmark levels the market saw in the fall time period. The early expectation for next week's storage report is a withdrawal of 70 BCF.

A NYMEX prompt month futures contract hadn't traded below the $2.00 level since the summer of 2020 when the August 2020 contract was trading in the upper $1.00 range. Extremely warm weather in many of the larger consuming regions of the US has been the catalyst for the price drop. The glut of gas from the supply vs demand imbalance continues to pressure natural gas prices lower. While lower short term gas prices look to be in place for a while, the effects of prices at this level are starting to impact future natural gas production levels. Many gas producers are starting to slow down drilling rig activity as a response to this crash. A reduction in drilling will ultimately result in a slowdown of daily production growth. The slowdown in production growth could ease the oversupplied market later in the year and allow the market to once again move into a period of tightness which was a major catalyst for last year's price surge.