Natural Gas News: Early Rally Stalls Below $4.218 as Market Eyes Key Support Levels

Natural Gas Slips as Bulls Lose Grip Near $4 – Is the Rally Already Fizzling?

Natural gas futures are softening Monday after an early rally ran out of steam just shy of a key resistance level. January contracts touched $4.140 in early trade, teasing a breakout above last week’s high, but sellers quickly regained control, dragging prices back toward $3.95. With expiration pressures mounting and weather models offering mixed signals, traders are left trying to sort out if this move has legs — or if the rally’s done for now.

At 14:30 GMT, January Natural Gas futures are trading $3.905, down $0.079 or -1.98%.

Was That the Last Pop Before Expiration?

Early strength was fueled by short-covering as traders adjusted positions ahead of the January contract’s expiration. A minor bump in heating degree days (HDDs) for early January also helped spark a push above Friday’s highs. But the move stalled just under $4.218 — last week’s swing top — and bulls couldn’t force a breakout. Price reversed lower, suggesting the short-covering may have run its course without real fundamental backing.

Technically, a decisive close above the 50-day moving average near $4.447 could have opened the door toward the next resistance band at $4.668–$4.672. Instead, the market is now probing downside territory between $3.913 and $3.840 — the lower end of last week’s range. If support doesn’t hold here, bears could push toward the $3.780–$3.538 zone.

Colder Outlook? Not Convincing Traders Yet

While some models show a slightly cooler start to January, it’s hardly game-changing. NatGasWeather called for above-normal temperatures across most of the U.S. through December 25, with only limited cold focused in the northern Plains and Midwest. The National Weather Service echoed that sentiment, pointing to a general warming trend through New Year’s, especially in the snow-covered Midwest.

Bottom line: winter demand expectations just aren’t gaining traction. Short bursts of cold aren’t enough to offset the broader warmth narrative, and that’s keeping bulls in check.

Storage Draw Impressive — But Market Yawns

The latest EIA report showed a larger-than-expected draw of 167 Bcf, pulling total storage to 3,579 Bcf. That’s now 61 Bcf below last year and 32 Bcf above the five-year average. On paper, it’s a supportive number. But with weather and supply dominating sentiment, the market barely blinked. Traders appear to view the draw as a seasonal adjustment — not a shift in the bigger supply/demand equation.

Short-Term Outlook: Bearish Unless Bulls Reclaim $4.218

The bounce attempt looks shaky. Unless buyers step in with size and break above $4.218 soon, pressure likely builds toward the $3.84–$3.78 support zone. Expiration-related noise may continue, but fundamentals — warm weather and strong production — still lean bearish. Traders fading rallies are back in control for now.

More Information in our Economic Calendar.