Natural Gas News: Could an Early January Cold Blast Be the Catalyst to Spike Prices Higher?

Natural Gas Futures Rise as Cold January Forecast Boosts Demand Expectations

U.S. natural gas futures climbed this week, driven by forecasts for colder-than-normal weather across the central and eastern U.S. in early January. This anticipated rise in heating demand helped counterbalance bearish storage data, keeping futures elevated as traders positioned for increased consumption.

Last week, Natural Gas Futures settled at $3.383, up $0.031 or +0.92%.

January Cold Front Sparks Buying Interest

Forecasters from Maxar Technologies project below-normal temperatures from January 1-5, with a more intense cold snap expected to follow. Market participants are betting on this colder outlook to drive stronger heating demand, reinforcing bullish sentiment throughout the week​.

The colder forecast comes as the market digests a warmer-than-expected December, which had temporarily softened demand. However, January’s potential shift in weather patterns has reignited optimism, prompting fresh speculative interest.

Storage Levels Reflect Ample Supply

Despite bullish weather forecasts, the latest U.S. Energy Information Administration (EIA) report revealed a 93 Bcf withdrawal from storage for the week ending December 20, falling short of the 100 Bcf consensus​. This leaves total working gas in storage at 3,529 Bcf—166 Bcf above the five-year average.

The storage surplus underscores the challenge facing bullish traders, as inventories remain higher than seasonal norms. This could limit upward price momentum unless colder weather persists into mid-January, accelerating withdrawals and tightening supply.

Production and LNG Exports Remain Strong

U.S. dry gas production reached 106.4 Bcf/day, reflecting a modest year-over-year increase​. At the same time, liquefied natural gas (LNG) export flows to terminals dipped slightly to 14.4 Bcf/day, driven by short-term maintenance and logistical factors.

Domestic demand continues to rise, supported by electricity generation. The Edison Electric Institute reported a 1.87% year-over-year increase in power output for the week ending December 21, contributing to higher gas consumption​.

Market Outlook: Cold Weather Key to Sustained Rally

The near-term outlook for natural gas hinges heavily on the intensity and duration of January’s cold front. Should forecasts for below-normal temperatures persist, demand could rise sharply, supporting higher prices. However, if milder weather re-emerges, the current storage overhang may lead to renewed downward pressure.

Technically, the main trend remains up. The long-term range is between $3.904 and $2.192, placing the pivot point at $3.048—this serves as the first key support level. Additionally, the minor range between $2.192 and $3.614 creates another pivot at $2.903, reinforcing support. Together, the $3.048 to $2.903 zone acts as a critical area of support that could stabilize prices in the event of a pullback.

If upside momentum continues and natural gas futures breach the $3.614 level, the rally is likely to extend toward the $3.904 target. A decisive move above this zone could open the door for further gains as traders bet on sustained cold weather driving higher demand. Conversely, failure to hold the $3.048 pivot could shift sentiment, prompting a deeper retracement.

Traders remain focused on evolving weather models and upcoming EIA storage reports, as these factors will be pivotal in shaping market direction in the coming weeks.

More Information in our Economic Calendar.