Natural Gas News: Cold Snap Boosts Demand, But Warm Weather Ahead Caps Gains

Futures Slide Following Midweek Rally

U.S. natural gas futures eased lower on Friday as traders consolidated gains after a two-day surge driven by colder weather and a significant storage withdrawal. The lack of follow-through to the upside reflects investor indecision, with the market awaiting a clear catalyst to sustain the rally.

At 14:59 GMT, Natural Gas futures are trading $3.348, down $0.107 or -3.10%.

Technical Levels Define Trading Range

Natural gas futures are bounded by key technical levels, signaling indecision. Immediate resistance lies at $3.444, with additional hurdles at $3.559 and the double tops of $3.637 and $3.647. On the downside, support is anchored between $3.118 and $2.993, aligning with the 50-day moving average at $3.097. The broader trading range is encapsulated by Fibonacci levels at $2.993 and $3.647, underpinned by the 200-day moving average at $3.375.

EIA Reports a Bullish Storage Withdrawal

The U.S. Energy Information Administration’s (EIA) latest storage report revealed a net withdrawal of 190 Bcf for the week ending December 6, exceeding market expectations and the five-year average draw of 71 Bcf. Total working gas now stands at 3,747 Bcf, which is 67 Bcf above last year’s levels and 165 Bcf above the five-year average. This bullish print sparked a 7.7-cent day-over-day gain for the January contract on Thursday.

Demand to Wane Next Week

According to NatGasWeather, strong national demand will persist through Saturday as cold conditions grip the Midwest and eastern U.S., with temperatures plunging into the single digits and teens. However, milder weather across the southern and eastern U.S. will return late this weekend, reducing demand through late next week. Forecasts indicate colder weather for the Great Lakes and East around December 21-23, followed by above-normal temperatures for much of the country from December 24-28.

Market Outlook

While the recent storage report and current cold snap provide short-term support, the bearish shift in weather patterns and expectations of weaker demand next week may cap gains. Traders should watch for further weather developments and technical resistance levels as potential barriers to upside momentum. Near-term, natural gas futures face a neutral to bearish outlook unless a new catalyst emerges.

More Information in our Economic Calendar.