Natural Gas News: Bears Still in Control as Weather and Storage Cap Upside

Natural Gas Struggles for Direction as Bulls and Bears Square Off Near Key Support

Natural gas futures are stuck in a tug-of-war on Friday, hovering around $3.91 at mid-session as traders hesitate at a key former bottom. After an early bounce attempt, prices faded again, with warm weather patterns and a lighter-than-expected storage draw keeping the bulls on edge. Oversold signals may be keeping some short-covering alive, but aggressive dip-buyers have yet to fully commit.

At 17:02 GMT, January Natural Gas futures are trading $3.928, up $0.020 or +0.51%.

Is Weather Still the Driver — Or Just an Excuse?

The market can’t shake the warm-weather script. NatGasWeather is calling for broad mild conditions across most of the U.S. through Christmas Eve, with highs ranging from the upper 40s to 80s.

A colder pocket remains in the Northern Plains and Upper Midwest, but it’s not enough to push demand out of the “low” zone. Earlier in the week, prices reacted to a colder forecast for late December, but traders clearly aren’t betting on it just yet.

The market wants to find cold in the extended maps. But so far, the models haven’t delivered anything sticky. Without a meaningful shift, rallies will likely be sold into.

Storage Print Undershoots — But Still Better Than Average

Thursday’s EIA report showed a -167 Bcf draw for the week ending Dec. 12 — smaller than the -176 Bcf consensus but still stronger than the five-year average of -96 Bcf. That’s not bullish, but it’s not outright bearish either.

nventories are now down 1.2% year-over-year and sit 0.9% above the five-year average. It’s a soft miss, but not enough to completely break support — especially with the market already heavily sold.

Europe’s storage levels, sitting at 69% full versus the five-year average of 78%, add some subtle support to the broader picture — but traders haven’t been pricing in global tightness lately.

Production Still Weighing on Bulls

U.S. production remains a ceiling for any major bounce. Thursday’s lower-48 dry gas output clocked in at 112.9 Bcf/day, up nearly 9% year-over-year. LNG feedgas demand was down week-over-week, with net flows to export terminals at 17.5 Bcf/day.

Demand continues to lag behind supply — Thursday’s U.S. gas consumption was just 90.9 Bcf/day, down 4.4% year-over-year. The balance still favors the bears, at least fundamentally.

Is $3.842 the Line in the Sand for Now?

Price action is compressing. A break below $3.842 could reignite the downtrend, but sellers may be hesitant to press it ahead of the weekend. On the flip side, a move through $4.218 might spark a run toward the 50-day moving average at $4.449 — but that likely needs a bullish forecast surprise. Until then, it’s chop around support.

Short-Term Outlook: Bearish Bias Holds, But With Caution

The tone remains heavy with warm weather, soft demand, and high production weighing on sentiment. Unless weather models flip colder in the midday updates, rallies will likely struggle. That said, positioning appears cautious near key support, so expect whipsaws if buyers show up late. Bottom line: bears have the edge, but it’s not a runaway.

More Information in our Economic Calendar.