Natural Gas News: Surging Demand Raises Risk of Supply Deficit as Traders Eye $4.201

Cold Weather Drives U.S. Natural Gas Futures Higher

U.S. natural gas futures have climbed this week, crossing a significant pivot level at $3.766. This rally is underpinned by stronger demand from freezing temperatures across much of the country. Traders are now watching for a potential run toward resistance at $4.201 and $4.442, while support levels remain at $3.766 and a broader zone between $3.391 and $3.197.

The current cold spell threatens to deplete the existing surplus, raising the possibility of a supply deficit as winter progresses.

At 14:32 GMT, Natural Gas futures are trading $3.965, up $0.264 or +7.13%.

How Is Demand Being Impacted by the Cold?

A prolonged cold front has blanketed much of the United States, driving heating demand higher. Temperatures this week are plunging as low as -10°F to 20°F across interior regions, with even southern states like Texas experiencing lows between 10°F and 30°F.

Forecasts suggest a brief reprieve from the extreme cold around January 17-18, but another Arctic front is expected to hit between January 19-22, ensuring continued strong demand for heating fuel.

The West Coast remains the exception, where milder conditions and highs ranging from the 40s to 70s are tempering the national outlook.

What Do Storage Levels Tell Us?

The latest data from the U.S. Energy Information Administration (EIA) reported a 40 Bcf withdrawal from working gas storage for the week ending January 3, in line with expectations. Current storage stands at 3,373 Bcf, just below last year’s 3,376 Bcf at this time but still 207 Bcf above the five-year average.

While inventories remain within a comfortable range, the sustained high demand from frigid temperatures threatens to rapidly erode this surplus. With more cold weather expected, the risk of a supply squeeze could rise sharply as winter continues.

What’s Next for Natural Gas Prices?

The outlook for natural gas prices remains volatile, with strong demand from the ongoing cold weather likely to sustain upward momentum. A breakout above $3.766 could see prices testing $4.201, with further potential to reach $4.442.

However, any unexpected moderation in weather conditions could lead to price pullbacks, with traders closely watching support at $3.766 and the $3.391-$3.197 range. For now, the market remains firmly focused on weather-driven demand as a key driver.

More Information in our Economic Calendar.