Natural Gas News: Will Cold Weather Sustain the Rally or Trigger a Market Reversal?

Natural Gas Futures Steady as Cold Weather Holds Market in Check

Natural gas futures remained flat in early Wednesday trading after two consecutive days of gains, as traders assessed whether bullish weather forecasts could sustain upward momentum. With the prompt month contract straddling the key pivot level of $3.519, the market is poised for a potential breakout or a pullback.

Prices have risen sharply this week, gaining 13.5 cents on Monday and another 7.5 cents on Tuesday. The primary driver has been forecasts of extended cold, which could widen storage deficits and push demand higher. A sustained move above $3.519 could open the door to a run toward $4.020, while a failure to hold this level may lead to a decline toward the 50-day moving average at $3.112.

At 14:10 GMT, Natural Gas Futures are trading $3.533, up $0.014 or +0.40%.

Will Cold Weather Sustain the Rally?

Forecasts remain supportive for natural gas bulls, with colder trends persisting through late February. Several winter storms are expected to sweep across the U.S. between February 12-22, bringing frigid temperatures and strong national demand.

From February 12-17, much of the interior U.S. will experience freezing conditions, with highs ranging from 0s to 40s and lows dipping as far as -10s. The far southern U.S. will be the only exception, seeing milder conditions with highs in the 50s to 70s. This widespread cold should keep demand elevated for at least the next week.

Storage Deficits Grow as Consumption Surges

January’s below-normal temperatures fueled a surge in U.S. natural gas consumption, which averaged 124.4 Bcf/d—12% above the five-year average. Residential and commercial demand rose to 50.6 Bcf/d, marking a 13% increase, while the power sector’s usage jumped 20% to 37.6 Bcf/d.

This increased consumption led to steep storage withdrawals. January saw nearly 1,000 Bcf pulled from underground reserves, 39% above the five-year average. As of late January, total inventories stood at 2,421 Bcf, 4% below historical norms. With storage expected to remain tight through March, supply concerns could keep prices elevated.

What’s Next for Prices?

Henry Hub spot prices averaged $4.13/MMBtu in January, up more than $1 from December’s levels. A mid-January cold snap briefly sent prices as high as $9.86/MMBtu, highlighting how weather-driven volatility remains a key risk.

Looking ahead, the market faces a pivotal test. If cold weather persists and storage withdrawals remain aggressive, prices could climb toward the $4.00/MMBtu range. However, any signs of moderating demand or a production rebound could put downward pressure on prices, with $3.50/MMBtu acting as a key technical battleground.

For now, traders should watch for further updates on winter forecasts, storage reports, and potential production shifts, as these will dictate short-term price action.

More Information in our Economic Calendar.