Natural gas futures sank on Thursday after a smaller-than-expected drawdown in US inventories. With warmer temperatures appearing throughout the United States, there are signals that the future withdrawals could be smaller than reported since November.

April natural gas futures tumbled $0.123, or 2.76%, to $4.327 per million British thermal units (Btu) at 15:37 GMT on Thursday on the New York Mercantile Exchange. Natural gas has had a solid start to March and is poised for a weekly gain of more than 10%. Year-to-date, natural gas prices have risen nearly 40%.

According to the US Energy Information Administration (EIA), natural gas inventories fell 80 billion cubic feet for the week ending Feb. 28, up from the previous week’s drawdown of 261 billion cubic feet. This was smaller than the market estimate of 96 billion cubic feet.

The drawdown was broad-based, with South Central (-30 billion cubic feet) and the Midwest (28 billion cubic feet) accounting for much of the decline.

In total, US natural gas supplies stand at 1.76 trillion cubic feet, down 585 billion cubic feet from the same time a year ago. They are also 224 billion cubic feet below the five-year average of 1.984 trillion cubic feet.

The tariff strife has had little effect on the oil and gas market, particularly for natural gas.

Despite Canada stating that the United States needs natural gas, the United States maintains one of the largest reserves in the world and is still producing about 90 billion cubic feet per day. And, with the new administration, US output of natural gas is expected to accelerate.

“in contrast to oil, U.S. gas production is likely to increase significantly in 2025, after prices more than doubled in real terms from the multi-decade low in the first quarter of 2024. Dry gas production declined slightly to an average of 103.2 billion cubic feet per day (bcf/d) in 2024 from 103.6 bcf/d in 2023. Front-month futures prices slumped to an average of less than $1.80 per million British thermal units in March 2024, the lowest since futures trading began in 1990, after adjusting for inflation,” said John Kemp Energy.

Supplies have tightened sharply and the deficit is widening. As prices remain above $4, natural gas production will likely restart.

In other energy markets, April West Texas Intermediate (WTI) crude oil futures fell $0.34, or 0.51%, to $65.97 per barrel. May Brent crude futures shed $0.24, or 0.35%, to $69.04 a barrel. April gasoline futures erased $0.0351, or 1.64%, to $2.1017 per barrel. April heating oil futures dropped $0.0208, or 0.93%, to $2.22 per barrel.