Natural gas prices have recorded their largest decline of the year across global and Indian commodity markets. 50 per unit. 02 per MMBtu. According to market reports, this decline is primarily driven by weakened demand and a surplus in supply.
Impact of Warmer Weather on Heating Demand
The primary driver behind the sharp fall in natural gas prices is the unseasonably warm weather across parts of the United States and Europe. Typically, during the winter season, demand for natural gas peaks due to heating requirements. However, this year, temperatures have remained relatively mild, Importantly reducing heating demand. Weather forecasts indicating continued warmth have further pressured prices. 80, but the shift in weather patterns has led to a massive correction of nearly 54% from those highs.
EIA Storage Data and Market Implications
Recent data released by the US Energy Information Administration (EIA) has added further downward pressure on the market. According to the figures, only 71 bcf (billion cubic feet) of gas was withdrawn from storage in January 2026, falling short of the market expectation of 90 bcf. In comparison, 227 bcf was withdrawn during the same period last year. The lower-than-expected withdrawal indicates that domestic consumption has slowed down, leaving ample gas reserves in storage. While total inventory remains 130 bcf below the five-year average, the sluggish withdrawal rate has sent negative signals to the market.
Record Production Levels and Supply Surplus
On the supply side, natural gas and crude oil production in the United States have reached record levels. Enhanced recovery from existing wells and increased drilling activities have ensured high availability of gas in the market. The combination of record-high production and weakened domestic demand has created a supply glut, making it difficult for prices to sustain higher levels. Although Liquefied Natural Gas (LNG) exports remain strong, they've not been sufficient to offset the impact of low domestic demand and rising global supply levels.
Price Trends in the Indian MCX Market
The global price correction has had a direct impact on the Indian futures market. On the MCX, natural gas contracts have faced consistent selling pressure. 50 mark. This decline in the Indian market mirrors the weakness in international benchmarks and is further influenced by steady industrial demand. Energy analysts note that until there is a significant shift in international weather patterns or storage data, the volatility in prices is expected to persist.