Demand was curtailed by above average temperature in the continental U.S. Supposedly, February 2012 to January 2013 was the warmest February-to-January period since at least 1880, when the NOAA started keeping records.
On the supply side, natural gas continued to pour out Shale formations in the mid-continental U.S. The U.S. produces more natural gas than even coal.
This demand-supply imbalance resulted in bloated inventories. Natural gas in the underground storage during this winter was at the high end of 5-year average. This situation is about to change. We could see a late winter cold snap in early March, which could pull the temperature in the eastern seaboard to below average, and increase demand for natural gas, the source of home heating for more than 50 percent of US households.
From a technical standpoint, the UNG (natural gas ETF) chart looks interesting. It has decisively broken above the "winter" downtrend and is comfortably resting above both (1) 50-day moving average and (2) 50% Fibonacci retracement level. The weekly EIA inventory data this Thursday will be pivotal. If natural gas price holds up after the release of the data, we might be seeing a short-term upswing in UNG price. I'm betting on that outcome. I'd say it's time to go long UNG.
