Natural Gas News: Traders Eye $3.766 Pivot as Futures Face Downward Pressure

Natural Gas Futures Dip as Traders React to Key Technical Levels

U.S. natural gas futures fell on Tuesday as traders rejected a key technical pivot at $3.766, a level now dictating short-term price direction. Failure to breach this resistance suggests waning bullish momentum, while crossing above it could revive upward pressure, potentially driving prices toward the recent high of $4.201. Conversely, an extended pullback could shift focus to a support zone between $3.391 and $3.197.

At 14:50 GMT, Natural Gas futures are trading $3.581, down $0.091 or -2.48%.

Weather Uncertainty Limits Bullish Sentiment

Monday’s rally, which saw February Nymex natural gas futures rise 31.8 cents to settle at $3.672, lost steam early Tuesday as weather models presented mixed signals on the scope of colder temperatures. NatGasWeather highlighted divergence between major forecasting models, with the American model adding two heating degree days (HDD), while the European model trended warmer by eight HDDs.

Despite discrepancies, both models still forecast strong cold for the next 15 days, albeit with less intensity in the overnight European data. This cooling trend supports high demand but lacks the consistency needed to fuel sustained bullish sentiment. Traders are closely watching midday updates for further alignment or divergence in forecasts.

Demand Outlook Holds Firm with Intermittent Mild Periods

National demand is projected to remain robust over the next 10 days, driven by below-normal temperatures across much of the U.S. A brief milder period between January 18-19 could offer some reprieve before another cold front sweeps across the country. This pattern maintains elevated demand for heating, with colder-than-average conditions gripping the interior U.S.

Through January 13, significant portions of the eastern and central U.S. will experience lows in the -10s to 20s, with even the South seeing temperatures dip into the 10s to 30s. In contrast, the West Coast will stay relatively mild, with highs ranging from the 40s to 70s. High-to-very-high demand is expected to persist through the next week, supporting near-term price stability.

Market Forecast: Bearish with Key Resistance Holding

The inability of natural gas futures to decisively break above the $3.766 pivot suggests near-term bearish sentiment. Until buyers gain the strength to sustain a move past this level, downward pressure is likely, targeting the $3.391-$3.197 support range. Weather-driven demand remains a crucial factor, but inconsistent model data may keep markets range-bound in the short term.

More Information in our Economic Calendar.