Natural Gas News: Market Eyes $3.84 Floor as Liquidity Thins Into Holiday Week

Can $3.84 Hold With Warm Weather and Light Holiday Volume?

Natural gas futures slid again last week, with the January contract settling at $3.984, down 3.14%, as weather turned against the bulls. The selloff wasn’t as sharp as the prior week, but the tone stayed heavy—especially after prices tested and held key support at $3.840.

With the Christmas holiday ahead, volume is thinning and fresh catalysts are lacking. The market’s in a holding pattern, and traders are watching price action for signs of exhaustion or renewed pressure. For now, the near-term setup still leans bearish.

Warm Forecasts Kill Heating Demand — Again

The primary driver remains the weather—and it’s not helping. Models now show above-normal temperatures across most of the U.S. through year-end, especially in the West, Central, and South. That’s a sharp shift from the early-December cold that sent gas to $5.496 and briefly reignited winter rally hopes. But the warmup crushed heating load: Texas res/com demand dropped 9% as Houston jumped from 43°F to 61°F, and Florida saw an 8% decline as mild conditions stretched across the Southeast. Bottom line: the market’s not pricing in winter anymore.

Production Stays Strong While Demand Softens

Fundamentals outside of weather aren’t offering much support either. Lower-48 production is still hovering near record highs at 109.7 Bcf/d—matching November’s peak. That’s keeping supply flush, even as the latest EIA storage draw came in at 167 Bcf, slightly below expectations despite beating the five-year average.

Inventories are just 0.9% above average now, down from autumn’s surplus. The bigger issue: demand just isn’t keeping up. There’s some softening in drilling activity—gas rigs fell by two to 127—but that’s more of a 2026 story. Near-term, the market remains oversupplied.

LNG Demand Is Strong — But Bulls Still Can’t Catch a Bid

If there’s a bull case left, it’s LNG. Export volumes averaged 18.6 Bcf/d last week, hitting a fresh high and exceeding November’s record. Thirty-three cargoes left U.S. ports, showing strong international demand.

And there’s more coming: Venture Global’s Plaquemines facility and Cheniere’s new Corpus Christi unit are adding capacity, eventually bringing up to 3 Bcf/d of incremental demand. But both are still ramping, and near-term flows won’t meaningfully change the current oversupply narrative.

Is the Market Oversold — or Just Weak?

Technically, gas is carving out a range between $3.840 and $5.496, with a pivot around $4.668. Bulls would need a break above that to chase higher levels, but with no near-term driver, it’s a tough ask. The 52-week moving average sits at $4.772 — a key resistance level if buyers manage to push through the pivot. Above that, $4.916 marks the longer-term target.

A move below $3.840, though, would be a clean breakdown — and with light holiday trading ahead, thin liquidity could exaggerate moves in either direction. For now, sellers have control, and buyers aren’t stepping in.

Outlook: Bearish Into Christmas, But Bounce Risk Is Building

With weather staying mild and no bullish spark in sight, the market leans bearish into Christmas week. Positioning is stretched, though, and the contract has dropped nearly 30% since early December — which keeps short-covering risk on the table.

Still, until cold returns or LNG ramp-ups move the needle, rallies are likely to be sold. Traders should stay nimble and keep an eye on $3.840. If that breaks, the next leg lower may not wait for New Year’s fireworks.

More Information in our Economic Calendar.