Natural Gas News: Bearish Sentiment Builds After Weak Storage Report and Warm Forecast

Natural Gas Sells Off as Storage Draw Disappoints and Warm Weather Cools Demand

Natural gas futures broke lower late Thursday, giving back earlier gains after the weekly EIA storage report underwhelmed and failed to spark fresh buying. With prices now eyeing a test of the weekly low at $3.842, the market looks vulnerable to another leg down — especially with mild weather capping demand into late December.

At 21:03 GMT, January Natural Gas Futures are trading $3.893, down $0.131 or -3.26%.

Was the EIA Storage Draw Enough to Support Prices?

Not quite. The EIA reported a 167 Bcf withdrawal from storage for the week ending December 12, just below expectations of -169 to -174 Bcf. While still a sizable draw, traders had priced in something larger given the colder-than-normal temps across the eastern half of the U.S. during the sample week. The lighter-than-expected print pulled the rug out from under an early-session rally that had stalled near $4.218 — well below resistance at the 50-day moving average near $4.455.

Regionally, the South Central draw stood out on the soft side at just -48 Bcf, reinforcing concerns that structural demand remains shaky even in colder conditions. Total working gas in storage now stands at 3,579 Bcf — 32 Bcf above the five-year average, and the surplus is narrowing. But for now, that tightening isn’t doing enough to offset weaker short-term demand signals.

Traders Step Back as Warm Weather Pressures Demand

Forecasts from NatGasWeather are keeping a lid on bullish sentiment. The next seven days look warmer than normal across much of the Lower 48, with highs ranging from the upper 40s to 80s across key population centers. Cold air is largely bottled up in the Northern Plains and Upper Midwest, limiting the kind of broad-based heating demand needed to sustain a rally.

This weather setup points to another week or more of light drawdowns — not the kind of momentum bulls want heading into late December. Add in tepid price action and a failed rally into resistance, and it’s no surprise sellers are pressing the tape.

Where’s the Smart Money Positioning?

The short-covering run into $4.218 earlier Thursday was brief — and telling. Once stoppers came in at that level, the market faded hard. That rejection, paired with the failure to test the 50-day, suggests that funds and fast money aren’t ready to chase the upside. There’s also been little sign of dip-buying support since the EIA report hit. If anything, the path of least resistance is skewing lower again, with sellers eyeing a potential break of $3.842 to open up room for further downside.

Bottom Line: Outlook Leans Bearish into Next Week

With fundamentals soft and weather unsupportive, the market is struggling to justify higher levels. Unless forecasts flip or storage prints surprise to the upside, downside pressure is likely to persist. A close below $3.842 would confirm the next leg lower. For now, the bears are holding the wheel.

More Information in our Economic Calendar.