Natural Gas News: Traders Eye $4.30 as Weather Forecast Fuels Bullish Momentum

Futures Climb as Cold Weather and Storage Draw Boost Prices

U.S. natural gas futures rose sharply on Friday, breaking the key October resistance level of $3.647. This move positions prices for further gains, with the next major resistance at $4.300. On the downside, the 200-day moving average at $3.366 serves as critical support, reflecting long-term trend control. The market’s response to $3.647 into Friday’s close will likely dictate near-term direction.

EIA Data Signals Tightening Supply

The U.S. Energy Information Administration (EIA) reported a 125 Bcf withdrawal from natural gas storage for the week ending December 13, reducing inventories to 3,622 Bcf. While stocks remain 20 Bcf above last year’s levels and 132 Bcf above the five-year average, the sizable draw underscores strengthening winter demand. Production, meanwhile, remains steady at 103.8 Bcf/d.

Natural gas prices are up 40% year-to-date, hitting $3.66/MMBtu, the highest since January 2023. Concerns about cold weather across the Northern Hemisphere, along with geopolitical risks and supply constraints, are further fueling bullish sentiment.

Weather and Demand Forecasts Support Prices

The latest forecasts from NatGasWeather show light demand through Friday, strengthening over the weekend as a frosty system impacts the Midwest and Northeast. January’s outlook indicates colder-than-average temperatures across Europe, China, and Japan, driving higher heating demand. Analysts expect daily heating demand in the U.S. to jump by 18 Bcf over the weekend.

Geopolitical and Production Trends Remain Key

Geopolitical tensions, particularly between Russia and the West, could exacerbate supply risks, while U.S. producers have curtailed output to stabilize prices. Reduced production from key Gulf of Mexico facilities due to November’s Hurricane Rafael is also supporting higher prices.

Market Outlook: Bullish Bias

Natural gas prices are likely to remain supported in the short term, with the $3.647 level acting as a pivot. A sustained close above this resistance could target $4.300 in the coming weeks. Long-term, rising AI-driven electricity demand, coupled with colder winters and tightening supplies, suggests a bullish trajectory for natural gas. However, traders should watch for potential price volatility tied to geopolitical developments and weather fluctuations.

More Information in our Economic Calendar.