Natural gas prices fluctuate amid mixed signals and weather-driven demand
Natural gas prices hover near $3.56 amid bearish pressure
Natural gas prices traded at $3.56 per MMBtu, reflecting a 1.74% drop in the last session as bearish pressure built near a crucial support zone. The pivot point at $3.74 remains a key threshold—trading below this level could lead to additional selling pressure, with immediate support at $3.51 and deeper support at $3.33.
However, a recent upward trendline from prior lows suggests some bullish resilience, as buyers defend these critical levels. Technical indicators present mixed signals. The 50-day exponential moving average (EMA) at $3.77 acts as a ceiling for upward movements, while the 200-day EMA at $3.34 offers longer-term support, maintaining the broader uptrend. A decisive break above $3.74 could set the stage for a rally toward $4.05 and $4.35, signaling a potential recovery.
Natural gas price analysis (Dec 2024 - Jan 2025) Source: TradingView.
Colder weather and speculative positions drive volatility
US natural gas futures hovered near $3.95 on Wednesday, approaching two-year highs due to forecasts of colder weather expected next week, which could push daily demand to record levels. Despite lower heating demand this week and fewer curtailments from freezing wells, market sentiment remains bullish due to the anticipation of colder temperatures.
Speculators have increased long positions, reaching the highest levels since February 2022. Analysts predict that upcoming storage reports will reflect utility withdrawals exceeding 200 billion cubic feet (Bcf), potentially surpassing the January 2022 record. Such a significant drawdown could eliminate the current inventory surplus, driving stockpiles below the five-year average by the end of January.
Outlook: Market eyes weather forecasts and storage data
The natural gas market's trajectory remains closely tied to weather forecasts and inventory updates. A prolonged cold spell could bolster demand further, supporting prices. Conversely, milder weather could ease demand and limit upward momentum. Traders will watch upcoming storage data for confirmation of tightening supplies, with any surprises likely to trigger sharp price movements.
In our previous analysis, we discussed how natural gas prices edged higher near $3.84 amid bullish momentum driven by colder-than-average weather and technical support. This context reinforces the current narrative of sustained demand and market tightening amid Arctic conditions and rising exports.
