Natural gas in U.S. storage remains swollen, reflecting an exceptionally mild winter and record levels of production. The one-two punch weighed on prices through most of the heating season and raised concerns about an enduring bear market.

Yet elevated supplies in storage may ultimately lose much of the current bearish bite.

Prices see-sawed over the past several sessions, rallying at times despite storage exceeding the prior five year-average by 26.5% as of the week ended Feb. 23. That increased from 22% the previous week and more than doubled the glut relative to historical norms at the start of 2024. Every region of the country reported a double-digit surplus, with South Central inventories 29% above the average of the five previous years, the Pacific region in excess by 36%...