Natural Gas News: Will Arctic Weather Spark Bullish Momentum and Drive Demand Higher?

The first significant support level lies at $4.053, with additional pivots at $3.989 and $3.850. A breach of these levels could signal further downside. Traders should watch last week’s close at $3.989, as a close below this level may form a bearish chart pattern, pointing to weaker near-term price action.

While Thursday’s session saw double-digit gains driven by bullish weather forecasts and a robust storage report, Friday has seen no follow-through, raising concerns about the sustainability of the rally.

Storage Draw and Weather Outlook Fuel Volatility

The Energy Information Administration (EIA) reported a significant draw of 258 Bcf in storage for the week ending January 10, nearly double the five-year average of 128 Bcf. Working gas stocks now stand at 3,115 Bcf, 77 Bcf above the five-year average but 111 Bcf below year-ago levels.

Weather forecasts suggest moderate demand through Saturday before an Arctic Blast pushes demand to very high levels next week. Lows ranging from -20°F to 20°F are expected across much of the U.S., including Texas and the South, reinforcing bullish sentiment for heating-driven demand.

Supply and Demand Dynamics Keep Traders on Edge

Natural gas supply dipped by 0.8% week over week, with dry gas production falling to 102.4 Bcf/d. In contrast, demand rose by 1.3%, driven by a 3.1% increase in residential and commercial use. LNG pipeline receipts hit 15.4 Bcf/d, up 0.3 Bcf/d, as export demand continues to surge.

Exports to Mexico climbed 10%, highlighting strong international demand. However, power generation consumption dropped slightly, reflecting seasonal trends.