Natural Gas News: Futures Steady as Weather Models Clash Ahead of EIA Data

By:

James Hyerczyk

Published: Dec 27, 2024, 14:16 GMT+00:00

Key Points:

Natural gas futures rise as traders await EIA storage report and conflicting January weather forecasts.
GFS model shows colder January, adding 8 HDDs, while EC model trends warmer, reducing HDDs by 5-6.
National demand expected to remain light through early January despite mixed weather forecasts.
Last week’s 125 Bcf withdrawal left gas storage at 3,622 Bcf, 132 Bcf above the five-year average.
Futures may test $3.614 if EIA draw hits 100 Bcf; bearish data could drive prices toward $2.973.

In this article:

Natural Gas

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U.S. Natural Gas Futures Rise Ahead of EIA Storage Report

U.S. natural gas futures are trading higher on Friday as market participants anticipate the Energy Information Administration’s (EIA) weekly storage report. The upcoming data could determine near-term price direction, with traders closely watching for signals of colder weather and stronger demand.

At 14:07 GMT, Natural Gas futures are trading $3.428, up $0.109 or +3.28%.

Weather Models in Disagreement

Weather forecasts are contributing to market uncertainty, with the Global Forecast System (GFS) and the European model (EC) diverging in their outlooks for early January. The GFS trended colder, adding 8 heating degree days (HDDs) for the first week of January and predicting significant cold across the U.S. from January 7 to 11.

In contrast, the EC model projected warmer temperatures, reducing HDDs by 5 to 6 for the same period. This discrepancy of over 15 HDDs between the two models for January 6 to 11 is causing volatility, with traders leaning toward the EC model’s warmer outlook, contributing to weaker prices on Thursday.

Near-Term Weather and Demand

Forecasts for December 26 to January 1 suggest that much of the U.S. will experience above-normal temperatures. Northern regions are expected to see highs in the 30s to 50s, while the South will range from the 50s to 70s. Despite ongoing weather systems bringing rain and snow, overall national demand is projected to remain light through the weekend, limiting immediate upside potential for gas prices.

EIA Storage Outlook

Last week’s EIA report indicated a 125 Bcf withdrawal, leaving storage levels at 3,622 Bcf as of December 13. This puts stocks 20 Bcf higher than the same period last year and 132 Bcf above the five-year average. Analysts are expecting a 100 Bcf draw for today’s report, reflecting mild weather and modest demand.

Market Forecast

Daily Natural Gas

Should the EIA report confirm or exceed the projected 100 Bcf draw, natural gas futures could test this week’s high of $3.614, with a breakout potentially targeting $3.904. Conversely, a bearish report may trigger a test of $3.256, with further downside toward the 200-day moving average at $2.973 if selling accelerates. Traders remain focused on weather model shifts and storage data for directional cues in the coming sessions.

More Information in our Economic Calendar.

About the Author

James Hyerczykauthor

James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.