Natural gas prices finished the Feb. 5 trading session lower as energy markets shrugged off a record U.S. storage drawdown.
On the New York Mercantile Exchange, natural gas prices fell more than 2 percent to $3.39 per million British thermal units.
A massive drawdown in domestic inventories was not enough to boost prices.
For the week ending Jan. 30, U.S. energy firms withdrew 360 billion cubic feet from storage—the largest on record—according to Energy Information Administration data released on Feb. 5.
The previous all-time high—359 billion cubic feet—occurred in January 2018.
Total stockpiles fell to 2.463 trillion cubic feet, nearly 2 percent above levels observed the same week a year ago. They are also 1 percent below the five-year average of 2.49 trillion cubic feet.
The drawdown was broad-based, with the South-Central region registering a 159 billion cubic foot decline in supplies.
Prices slipped because the withdrawal came in slightly below the consensus estimate of 374 billion cubic feet. Additionally, investors had likely priced in the storage data during the 100 percent rally last month.
Looking ahead, it could be challenging for natural gas prices to find the next catalyst.
After many parts of the United States were blanketed with arctic temperatures, snowfall, and ice, the energy industry is restoring operations.
Production is expected to recover to around 106.4 billion cubic feet per day, while exports of liquefied natural gas (LNG) are averaging more than 18 billion cubic feet a day, says Phil Flynn, energy strategist at The PRICE Futures Group.
“At the same time, some in the natural gas industry worry that even with this record-breaking withdrawal the penchant for production of gas to return to record highs may cap prices unless we get cold again,” Flynn said in a Feb. 5 note.
As for the weather, forecasts suggest warmer temperatures through next week for much of the country, specifically in the Central and Eastern regions, according to AccuWeather.
Choppy Trading in Oil
Crude oil prices ended the Feb. 5 trading session lower as the United States and Iran agreed to hold talks in Oman on Feb. 6.A barrel of West Texas Intermediate crude oil dropped $1.85, or 2.84 percent, to $63.29 on the New York Mercantile Exchange.
Brent, the international benchmark for oil prices, tumbled $1.91, or 2.75 percent, to $67.55 a barrel on London’s ICE Futures exchange.
Geopolitical risks lifted prices in the first month of 2026, with oil rising 10 percent after last year’s sharp double-digit drop.
“Uncertainty about how these talks will play out means the market will likely continue to price in some risk premium,” ING commodity strategists said in a Feb. 4 note.
Strains between Washington and Tehran have intensified recently. The United States shot down an Iranian drone near a U.S. carrier on Tuesday. In response, Iran’s Revolutionary Guard threatened to capture a U.S.-flagged tanker transiting the Strait of Hormuz—a key transit hub for oil exporters in the region.
The political situation in Iraq could be another factor to watch for energy markets. Leaders in Baghdad want to appoint Nouri al-Maliki as the next prime minister, but the White House thinks he is too aligned with Tehran. President Donald Trump has teased diplomatic and economic consequences if al-Maliki is chosen.
Iraq is the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), producing more than 4.1 million barrels per day.
Domestically, oil prices found support midweek after the Energy Information Administration said crude stocks fell by a higher-than-expected 3.455 million barrels last week. This represented the largest drawdown since October.
Gasoline stocks rose 685,000 barrels. Distillate inventories plummeted 5.553 million barrels, while heating oil supplies dropped 16,000 barrels.
The latest upward movement in energy markets has also resulted in higher gasoline prices.
As of Feb. 5, the national average for a gallon of gas is $2.89, up 3 percent from a month ago, according to the American Automobile Association.
Industry observers say this could be the start of higher pump prices, as spring approaches and refineries transition to summer-blend gasoline production.
“Prices are rising across much of the West Coast as the transition to summer gasoline begins, and attention turns to another refinery shutdown in California expected in April,” Patrick De Haan, head of petroleum analysis at GasBuddy, said in a Feb. 2 blog post. “Over the coming weeks, we’re likely to see more states experiencing increases than decreases.”
March gasoline futures declined more than 2 percent to $1.925 a gallon. March heating oil futures fell 3.2 percent to 2.390 per gallon.
