Natural gas targets $3.90 as colder weather and LNG demand fuel the rally

Traders Union
All News
Commodities
Gas bulls eye further price gains

Cold weather forecasts revive heating demand expectations

The main catalyst for the rally has been a shift in U.S. weather forecasts: after an unusually warm start to November, weather models began to indicate the arrival of the first significant cold spell in the eastern United States. The expected drop in temperatures over the coming weekend increases the likelihood of stronger demand for gas used in heating, particularly in densely populated areas of the Northeast.

At the same time, market participants are reassessing weather expectations for the second half of November, as even a brief cold spell could noticeably alter the supply-demand balance at the beginning of the heating season. According to The Wall Street Journal, U.S. natural gas futures advanced for a third consecutive session, with the December NYMEX contract reaching $3.296/MMBtu, up 2.4%. It is important to note that XNGUSD prices on the Capital.com chart differ from those of the December Henry Hub futures contract, so a direct price comparison without accounting for the instrument's specifications would be incorrect. Nevertheless, the direction of the move confirms stronger buying interest amid weather-related risks.

LNG exports and lower production tighten available supply

Another important factor supporting prices is the high utilization of U.S. LNG export terminals, which limits the volume of natural gas available to the domestic market. According to LSEG, gas flows to liquefaction facilities are approaching a record 20 billion cubic feet per day, sustaining strong demand despite relatively warm weather in some parts of the United States.

Additional support comes from declining production: average daily natural gas output in the lower 48 U.S. states stands at approximately 112.2 billion cubic feet in November, compared with 113.4 billion in October. Although the decline of around 1.2 billion cubic feet per day does not yet indicate a long-term shortage, it reduces available supply during a period of seasonally higher consumption. Moreover, sustained strong demand from LNG terminals makes the U.S. market more sensitive to changes in international prices and disruptions to global supplies.

According to the EIA forecast released on November 10, U.S. LNG exports could increase from approximately 15 billion cubic feet per day in 2025 to 19 billion in 2027 as new production capacity comes online. Thus, the expansion of export infrastructure is gradually becoming a structural factor supporting domestic demand, although weather conditions and actual production trends remain decisive in November.

Storage data remain crucial for the next price move

At the same time, the fundamental inventory situation does not yet indicate a natural gas shortage, which significantly limits the medium-term upside potential. According to the latest EIA report released on November 5, natural gas inventories in U.S. underground storage facilities increased by 77 billion cubic feet during the week ending October 30, reaching 3.801 trillion cubic feet. This is 109 billion cubic feet, or 2.8%, below last year's level, but 54 billion cubic feet, or 1.4%, above the five-year average.

Notably, inventories in the South Central region remain approximately 1.1% below the five-year average, despite a weekly increase of 40 billion cubic feet. This regional imbalance means that overall natural gas supplies in the United States remain relatively comfortable, although certain regions may be more sensitive to short-term increases in consumption.

The next EIA report is scheduled for November 13, and its results will be particularly important for assessing the prospects of the current price rally. If the data show a smaller storage injection or an earlier-than-expected start to seasonal inventory withdrawals, this could strengthen the bullish momentum. Conversely, continued substantial injections would confirm adequate supply and increase the likelihood of profit-taking after the sharp price recovery.

At present, the outlook for NATGAS has improved significantly. A breakout above resistance near $3.57, as I noted in Natural gas tests $3.55 resistance as cold weather fuels a sharp rally, suggests further gains toward $3.80–3.90, although moderate profit-taking on long positions may occur before these levels are reached. Until the EIA report is released, pullbacks could be viewed as buying opportunities.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.