Natural Gas News: Price Forecast Turns Volatile as LNG Demand and Weather Collide

Will Natural Gas Prices Break Out or Stay Stuck in Consolidation?

U.S. natural gas futures edged lower on Friday but remain near the upper end of this week’s trading range. The market is consolidating just below a key technical pivot at $3.505, which has acted as resistance throughout the week. A break above this level could open the door for a move toward $4.020, the January high. Meanwhile, downside support is firm, with the 50-day moving average at $3.059, last week’s low at $2.990, and a key pivot at $2.932.

With the latest storage report showing a larger-than-expected withdrawal, traders are weighing whether tighter supply and a potential demand surge next week could push prices higher. However, near-term resistance remains a hurdle.

Does Storage Data Support a Bullish Case?

The latest EIA report released on Thursday showed a 174 Bcf draw from storage for the week ending January 31, exceeding some expectations but aligning with the five-year average. Total working gas now stands at 2,397 Bcf, which is 208 Bcf lower than a year ago and 111 Bcf below the five-year average.

While this points to tightening supply, inventories are still within historical norms, limiting immediate upside pressure. Regionally, the biggest declines came from the Midwest (-56 Bcf) and South Central (-47 Bcf), reflecting higher heating demand. The South Central salt storage saw a sharper decline of 12 Bcf, which could introduce supply volatility in the weeks ahead.

Colder Temperatures Ahead, but Will Demand Spike?

The February 6–12 forecast shows a stark weather divide. The northern third of the U.S. will see cold to very cold conditions, with snow and temperatures ranging from below zero to the 30s. Meanwhile, the southern two-thirds will remain mild, with highs between the 50s and 80s, especially across Texas. However, colder air is expected to push south early next week, potentially driving higher demand.

Forecasts from NatGasWeather indicate light national demand through the weekend, followed by a sharp increase to high demand levels next week. If the colder trend holds into mid-February, it could lend some support to prices. However, traders remain cautious, as recent mild weather has kept withdrawals in line with seasonal expectations rather than triggering a major rally.

How Are Chinese Tariffs Impacting LNG Markets?

On Monday, February 10, China is set to impose a 15% tariff on U.S. LNG, adding a layer of uncertainty to global trade flows. While experts see minimal short-term price impact, a prolonged trade dispute could shift investment and supply growth toward other regions.

Global LNG markets are already dealing with shifting demand patterns, and any sustained trade war could make U.S. LNG projects less competitive. This adds another layer of uncertainty to long-term pricing and supply strategies.

Market Outlook: Bearish Bias, but Next Week Holds Upside Risk

As of Friday, natural gas prices remain under pressure as the market struggles to break through resistance at $3.505. Mild weekend demand and technical hurdles suggest limited upside in the short run.

However, next week’s colder forecast and a potential storage-driven supply squeeze could shift momentum. Traders should watch for a decisive move above $3.505 or below $2.990, as either break could determine the next major move. Until then, the market remains in consolidation mode with a slight bearish tilt.

More Information in our Economic Calendar.