Natural gas prices surge as cold weather boosts demand and LNG outlook
Natural gas prices show bullish breakout trends
Natural gas prices climbed to over $3.7 per MMBtu, marking the highest level in over a year, as market dynamics point to stronger global demand and colder-than-expected weather forecasts. The breakout from an ascending triangle pattern signals a bullish trend, with prices finding support at $3.775 and immediate resistance at $3.989.
The next upward target could reach $4.262 if momentum persists. On the downside, key supports lie at $3.775 and $3.566, keeping the uptrend intact.
Natural gas price dynamics (Nov 2024 - Dec 2024) Source: TradingView.
Rising LNG demand drives market sentiment
The surge in U.S. natural gas futures aligns with expectations of heightened global LNG demand. The forecast of a cold front across the U.S. by mid-January increased weekend demand projections by 18 billion cubic feet, further strengthening market optimism. Data from the EIA revealed consecutive weekly withdrawals exceeding 100 bcf, underscoring the pressure on storage levels as winter sets in.
Geopolitical shifts also contribute to this bullish sentiment. The diminishing probability of Russian gas flowing through Ukraine has spurred European nations to diversify gas sources. Consequently, U.S. LNG exports have seen heightened interest. President-elect Donald Trump's pledge to issue additional LNG export permits is expected to further support U.S. exports, steering companies toward more profitable international markets.
The 50-day EMA, currently at $3.436, and the 200-day EMA at $3.160 are sloping upward, solidifying the bullish outlook for natural gas. This technical strength complements the market's improved fundamentals, as buyers maintain control. While the outlook remains optimistic, maintaining the $3.775 support level is crucial for continued upward momentum.
In our previous coverage, we analyzed natural gas futures breakout above $3.559, signaling bullish momentum and highlighting targets at $3.66 and $3.85. This aligns with the current trends pointing toward further gains in natural gas prices.
