Natural Gas News: Weather Gap Higher Fades as Prices Pull Back Below $4.201

Natural Gas Prices Ease After Early Surge as Traders Eye Key Support

U.S. natural gas futures initially surged on Monday, gapping higher at the open to reach $4.369. However, the market has since retreated below $4.201, signaling resistance at higher levels as traders reassess the balance between bullish weather-driven demand and broader market conditions.

The gap between last week’s high of $4.018 and Monday’s intraday low of $4.088 remains a focal point for traders. While the surge was fueled by colder-than-expected weather and record liquefied natural gas (LNG) exports, the market’s pullback suggests traders are looking for confirmation of sustained demand before pushing prices higher.

At 13:02 GMT, Natural Gas futures are trading $4.087, up $0.098 or +2.46%. This is down from an intraday high at $4.369.

Is the Arctic Blast Enough to Sustain Heating Demand?

An Arctic front is driving frigid temperatures across much of the United States, with northern regions experiencing lows in the negative teens to 20s and southern states, including Texas, seeing overnight lows in the 10s to 30s. NatGasWeather says, these conditions have elevated daily heating demand to record levels, and forecasts suggest another cold front could extend the trend through late January.

Despite these bullish factors, natural gas traders often sell into rallies rather than chasing momentum, which could explain the market’s retreat. Analysts expect the extreme cold to impact the next two Weekly EIA reports, but the question remains whether current demand levels can sustain the price climb without fresh catalysts.

LNG Exports Continue to Tighten Domestic Supplies

Robust LNG exports remain a bullish driver for the market. U.S. shipments to Europe are hitting record highs due to disruptions in global supply, including the termination of Russia’s transit agreement with Ukraine and outages at Norway’s Hammerfest LNG terminal. However, with U.S. production levels subdued, rising export demand is rapidly depleting storage reserves.

The latest EIA report shows storage at 3,373 Bcf, 207 Bcf above the five-year average. Yet, sustained cold weather and export activity could erase this surplus quickly, creating tighter supply conditions in the weeks ahead.

What’s Next for Natural Gas Prices?

With prices now below $4.201, traders are watching support at $3.850 for signs of further downside pressure. Resistance at $4.201 remains the key hurdle for a renewed rally, while filling the gap between $4.018 and $4.088 could introduce additional selling pressure.

The market’s near-term direction will hinge on weather forecasts and export activity. While bullish sentiment persists, the pullback below $4.201 suggests a cautious approach among traders. If cold weather and export demand remain strong, prices could retest resistance, offering opportunities for strategic positioning.

More Information in our Economic Calendar.