Natural Gas News: Colder Weather Fuels Surge Above $3.048 – Is $3.337 Next?

Futures Rally on Colder Weather and Rising Demand

U.S. natural gas futures advanced sharply on Wednesday, with December contracts climbing above $3.048 resistance. The rally reflects increased demand expectations tied to colder weather forecasts and sustained LNG feed gas flows. Futures reached $3.125, setting the stage for further gains if key support levels hold.

Cold Weather Boosts Heating Demand Outlook

The bullish momentum is driven by colder temperature forecasts for late November into early December. Maxar Technologies predicts a significant drop in temperatures from November 28 to December 2, which is expected to increase heating demand. This follows Tuesday’s gains, which built on Monday’s rally to achieve a five-month high for December futures.

U.S. natural gas consumption is rising, with lower-48 demand reported at 77.6 Bcf/day on Tuesday, a 1% year-over-year increase, according to BloombergNEF (BNEF). Electricity output is also growing, with the Edison Electric Institute reporting a 3.19% year-over-year rise for the week ending November 9, further supporting higher natural gas usage by utilities.

Supplies Remain Elevated Despite Lower Production

Ample supply levels could temper the bullish sentiment. The latest EIA report showed a storage build of 42 Bcf for the week ending November 8, surpassing the five-year average of 29 Bcf. Inventories are now 6.1% above their five-year seasonal average and 3.7% higher year-over-year. European storage is similarly strong at 93% capacity, slightly above its historical average.

Meanwhile, production has softened, with U.S. dry gas output reported at 101.1 Bcf/day, down 4.1% year-over-year. Active drilling rigs fell by one last week to 101, according to Baker Hughes, near the multi-year low of 94 rigs seen in September.

Market Forecast: Bullish Momentum Holds Above $3.048

Natural gas prices are poised for further gains if the $3.048 level holds as support, with upside targets at $3.136 and Fibonacci resistance at $3.168. A break above $3.168 could push prices toward the 200-day moving average at $3.337. Conversely, failure to hold $3.044 may signal a pullback to $2.825.

In the short term, colder weather and rising demand provide a bullish outlook, but traders should watch inventory levels and production trends for potential resistance to further gains.