Natural Gas News: Futures Gap Higher as Colder Weather Lifts Demand Outlook

U.S. Natural Gas Futures Rally Sharply on Technical Breakout and Colder Forecasts

U.S. natural gas futures opened the week on a strong note, gapping higher on Monday as colder weather trends and technical support bolstered buying interest. Traders are watching key resistance levels and weather developments closely for signs of sustained momentum.

At 13:55 GMT, Natural Gas is trading $3.224, up $0.148 or +4.81%.

Technical Break Highlights Upside Targets

Natural gas futures surged past critical technical levels on Monday, including the 50-day moving average at $3.115 and the 50% retracement at $3.118, turning these into immediate support zones. The next major resistance is the 200-day moving average at $3.383, followed by $3.444, a key pivot. A breach of $3.444 could open the door to a rally toward the main top at $3.647. On the downside, failure to hold support at $3.118 could see prices revisit $2.993 or potentially test $2.762 if selling accelerates.

Colder Weather Boosts Demand Outlook

Over the weekend, weather models shifted colder, with heating degree days (HDDs) increasing by 20 in the Global Forecast System (GFS) and over 10 in the European model. This marks a significant change, especially with a cold front forecast for December 20-23 across the U.S. East and Midwest. Temperatures during this period are expected to drop into the 10s to 30s, with lows as cold as -0s in some areas. While milder conditions dominate much of the 15-day forecast, the new pattern is less bearish than earlier expectations.

Oversupply Still a Headwind

Production remains elevated at over 104 Bcf/day, while the latest EIA report showed a smaller-than-expected 30 Bcf withdrawal. Total storage stands at 3,937 Bcf, 284 Bcf above the five-year average. These factors highlight ongoing oversupply concerns, even as seasonal demand for heating intensifies.

Market Forecast

The short-term outlook for natural gas futures leans cautiously bullish, supported by the strong technical breakout above $3.115 and colder weather forecasts. Prices are positioned to test resistance at $3.383 and $3.444, with a potential move toward $3.647 if demand expectations continue to improve and technical momentum holds.

However, downside risks remain. If support at $3.115 fails, the market could retrace to $2.993, with further selling pressure potentially driving prices toward $2.762. A failure to sustain colder weather patterns or further underwhelming storage withdrawals could weaken bullish sentiment and invite increased selling pressure. Traders should watch weather updates and inventory reports closely to gauge market direction.