Natural gas prices face resistance as demand rises amid stable supply
Natural gas price trends near $4.2 resistance
Natural gas prices remain around $4.2/MMBtu, with technical analysis suggesting strong medium-term bullish momentum. However, resistance at $4.36 has tempered gains after a breakout above key support levels.
The market saw a 1.39% intraday dip, driven by increased demand across Europe and the United States due to colder weather. Despite the pullback, traders remain optimistic about medium-term targets of $4.5 and $4.7, provided the $4.18 support level holds.
Natural gas price movement (Dec 2024 - Jan 2025) Source: TradingView.
Technical indicators signal cautious momentum
Natural Gas Futures continue an uptrend on the 4-hour chart, showing higher highs and higher lows. A breakout from a symmetrical triangle pattern indicates sustained bullish movement, although the recent pullback has tested the 20-day EMA at $4.18.
On the 30-minute chart, momentum indicators such as RSI and MACD highlight a bearish divergence, with RSI nearing oversold territory at 45.32. Additionally, trading volume, which supported the rally above $4, has declined slightly, raising concerns about the strength of the bullish momentum.
Europe's demand rises amid colder temperatures
In Europe, natural gas prices have declined to β¬46 per megawatt-hour, reflecting stable supply levels despite an increase in demand driven by colder weather. Gas storage levels are currently 65% full, lower than the 77% recorded last year. Forecasts predict colder-than-normal temperatures across northwest Europe from January 17 to 22, along with weak wind power generation until January 24, raising demand for natural gas.Β
Meanwhile, geopolitical tensions loom as the EU contemplates banning imports of Russian liquefied natural gas (LNG) amid new sanction considerations. Despite reduced pipeline imports, Europe imported record amounts of Russian LNG in 2024, underscoring its reliance on the resource.
Outlook and strategy
Natural gas traders are keeping a close eye on the $4.18 support level and broader geopolitical developments. While technical analysis points to further upside potential, macroeconomic factors and geopolitical uncertainties will play a critical role in shaping the future trajectory of natural gas prices.
In previous analyses, we observed bearish momentum dominating natural gas markets, with prices testing $3.55-$3.33 support zones amid weak demand. Those levels remain critical benchmarks for any future retracement.
