Natural Gas News: Will Europe’s LNG Demand Be Enough to Support U.S. Prices?

Natural Gas Prices Attempt a Rebound, but AI Disruptions Raise Demand Questions

U.S. natural gas prices are trying to recover on Wednesday after steep losses, but traders remain cautious. The November-to-January range of $2.110 to $4.021 suggests key support between $3.122 and $2.840, reinforced by the 50-day moving average at $2.945 and the 200-day at $2.691. However, resistance at $3.701 to $4.021 is strong, and without a sharp cold shift or a major storage draw, rallies may struggle to hold.

Weather forecasts point to moderate demand. A cold front moving through the Midwest and Northeast will bring snow showers and temperatures in the 20s and 30s, but the rest of the U.S. will see milder conditions. Another system will push into the Pacific Northwest next weekend, but its impact on overall demand remains uncertain.

At 13:09 GMT, Natural Gas Futures are trading $3.144, up $0.022 or +0.70%.

Can Natural Gas Hold Support as Fundamentals Weaken?

Despite Wednesday’s attempted bounce, February NYMEX futures extended losses on Tuesday as traders priced in softening demand. This week’s storage report is expected to show a significant withdrawal, but with milder weather on the horizon, storage drawdowns may slow in the coming weeks. Meanwhile, production remains robust, keeping supply levels high and limiting the chances of a strong technical rally.

In Europe, natural gas prices rose 3%, with the Dutch TTF benchmark trading at 49.67 euros per megawatt hour. Storage levels are at 55.5% capacity, with daily withdrawals estimated at 4.8 terawatt hours. While LNG imports are expected to increase, uncertainty over Ukrainian pipeline supply is keeping European traders on edge.

DeepSeek AI Could Disrupt the Bullish Demand Narrative

AI-driven power demand has been a key bullish argument for natural gas, with forecasts projecting that AI data centers could increase gas consumption by up to 10 bcf/d by 2030. However, this narrative is now under scrutiny after China’s DeepSeek unveiled an AI model that significantly reduces power needs.

If energy-efficient AI models like DeepSeek’s become widely adopted, they could slow the expected surge in electricity demand, reducing the need for natural gas as a backup power source. This introduces fresh uncertainty into long-term gas demand projections and could challenge the assumption that AI-driven growth will be a major bullish driver.

Market Outlook: Near-Term Caution, AI Efficiency Adds Uncertainty

Prices remain under pressure, with resistance at $3.701 to $4.021 and key support between $2.840 and $2.945. A break below could open the door to $2.691. While AI once looked like a long-term demand booster for natural gas, DeepSeek’s breakthrough raises new questions. Traders should closely monitor developments in AI efficiency, as they could reshape long-term demand forecasts for the sector.

More Information in our Economic Calendar.