Natural Gas News: Short Covering Lifts Futures Today but Forecast Remains Bearish

Natural Gas Futures Seek Support as Warmer Weather and Strong Supply Weigh on Sentiment

Natural gas futures edged higher early Wednesday in a modest rebound from steep losses, driven by short-covering near the 50-day moving average. The market is attempting to find technical footing following Tuesday’s sharp selloff, as traders grapple with near-record production, shifting weather models, and updated demand projections from the EIA.

At 14:23 GMT, January Natural Gas Futures are trading $4.622, up $0.048 or +1.05%.

Are Warmer Weather Forecasts Sapping Bullish Momentum?

Natural gas prices came under pressure Tuesday, with January contracts shedding nearly 7% to close at a one-week low. Warmer weather outlooks from Atmospheric G2 now show above-normal temperatures across much of the U.S. from December 14 through December 23—especially in key heating regions like the Central U.S. The change weakens expectations for sustained winter demand, which had recently supported a rally to near three-year highs.

Does Strong Supply Undercut Short-Term Price Support?

Production remains a persistent headwind. U.S. lower-48 dry gas output hit 111.9 Bcf/d on Tuesday, up 7.2% year-over-year, while demand rose 22.5% to 108.8 Bcf/d. LNG feedgas volumes also climbed to 18.1 Bcf/d. Despite these high consumption levels, the supply overhang remains intact.

The latest EIA data showed storage withdrawals of just -12 Bcf for the week ending November 28—well below the five-year average draw of -43 Bcf—underscoring still-comfortable storage levels. This week’s withdrawal is expected to be in the triple digits.

What Did the Latest EIA Outlook Reveal?

In its December Short-Term Energy Outlook, the EIA maintained its 2025 dry gas production forecast at 107.7 Bcf/d while nudging demand projections up slightly to 91.8 Bcf/d. These revised numbers highlight continued supply-demand imbalances into next year. LNG exports are expected to grow from 11.9 Bcf/d in 2024 to 14.9 Bcf/d in 2025, offering some structural support, but not enough to offset domestic oversupply in the near term.

Is Technical Support Holding the Line for Now?

Wednesday’s early price action centers around the 50-day moving average at $4.494, a level that has acted as a technical base since late October. A sustained bounce from here could open a path to resistance near $4.627 and the 200-day moving average at $4.724. However, failure to hold above this support would expose the market to potential downside targets at $4.390 and $4.052.

Market Forecast: Bearish Near-Term Outlook Holds

Despite brief rebounds, natural gas remains under bearish pressure in the short term. Warmer mid-December weather forecasts and resilient production are overwhelming pockets of demand strength.

Unless weather turns colder or storage draws accelerate meaningfully, traders should expect continued softness in prices, with downside risk prevailing until stronger bullish catalysts emerge.

More Information in our Economic Calendar.