Natural Gas Q1 2025 Price Forecast

Natural Gas Outlook

As we close out the year, the latest headline is that there is a nasty arctic blast coming to the US that will drive up demand for a couple of weeks. Here in lines the conundrum of trading natural gas for retail traders. They have to focus on the next 10 days. You have to know the amount of storage, the amount of transmission across lines, the amount of exports to Asia, and now possibly the European Union, as it looks like natural gas won’t be flowing through Ukraine anymore from Russia. So, with all these things combining, you would assume that natural gas should shoot straight up in the air, and it has to a point, but the candlestick you’re looking at on the weekly chart is a result of low liquidity as well. So, you can only read so much into it.

As a cyclical trade, natural gas typically does fairly well through the month of January and I think this year will be more of the same. But sometimes towards the end of Q1, you’ll see natural gas plummet, unless, of course, something changes out of the ordinary. I think you’ve got a situation where we probably pull back in the very first few sessions of Q1, have another bounce, and that bounce is when I would be very cautious about getting long of natural gas again.

I don’t know if I would short it. We’ll just have to see what happens when we get there, but I certainly won’t be a buyer once we get into February. There’s just, as a rule, I just don’t do it. There are some things that can change that. For example, you can get a war breakout, like we saw a couple of years ago.

But from a demand standpoint, it typically falls off of a cliff in spring. And you have to keep in mind that the futures market is what drives the pricing of the spot CFD. So depending on which futures market or which calculation they use, sometimes it’s an average of a couple of contracts, you may see your natural gas contracts really fall off after a few weeks in Q1, because the futures markets are pricing in early spring, for example, or even late spring. So keep that in mind. I’m looking at this as a pullback, one more surge higher, perhaps as high as $5. We’ll just have to wait and see, and then at that point in time, I expect to see weakness creep back into the market.