Natural Gas News: Short-Covering Lifts Prices Today — But Is It Just a Pause?

Natural Gas Futures Rebound Off Lows — But Can It Stick?

Natural gas futures are ticking higher Wednesday as traders step in to book profits after a sharp multi-day selloff. With prices recently collapsing from a 3-year high on December 5 to a 7-week low on Tuesday, the move looks less like bullish conviction and more like a breather.

A weak fundamental backdrop and bearish weather forecasts are still weighing on sentiment — and buyers may need more than just short-covering to push the market higher.

At 14:34 GMT, January Natural Gas Futures are trading $3.997, up $0.111 or +2.86%.

Has the Market Found a Bottom — Or Just Pausing the Slide?

After falling to $3.842, January futures have bounced modestly, with traders now eyeing a new short-term range between that low and $5.496. The 50% retracement level at $4.669 is a key upside target, but there’s plenty of resistance before then.

The 50-day moving average at $4.463 is the first hurdle, with the 200-day at $4.695 looming above as the key trend indicator. For now, the bounce feels technical, not fundamental — and any serious move higher will need a stronger catalyst.

Weather Still Bearish, but Already Priced In?

The big driver behind the recent plunge has been weather. Forecasts from Atmospheric G2 are calling for much warmer-than-normal temps across the western and southern U.S. through the end of December.

Traders have been pricing this in aggressively — hence the collapse in prices over the last two weeks. With the market generally trading 10–15 days out, the current warm wave is likely baked in. But unless colder risks emerge for early January, the path of least resistance remains lower.

Production Pressures Mount, Demand Offers Some Support

Supply is another headwind. Lower-48 dry gas production hit 111.5 bcf/day on Tuesday — up 7.5% year-on-year — and EIA has slightly raised its 2025 production outlook to 107.74 bcf/day. That’s keeping storage levels well supplied despite a decent draw of 177 bcf in the latest EIA report.

U.S. gas inventories are now 2.8% above the 5-year average, while European storage sits at 70% full — below average but still comfortable. LNG export flows dipped slightly this week, while electricity demand has offered some support, rising 2.3% year-over-year in early December.

Bottom Line: Short-Term Bounce, But Rally Needs a Real Driver

The short-covering bounce off Tuesday’s lows is more about positioning than fundamentals. Resistance levels are clearly defined, but without a base of support or a meaningful shift in weather models, any rallies are likely to be sold.

The market remains in “sell-the-rally” mode until we see either a legitimate cold shot or signs of tightening supply. For now, the trend bias is still bearish — even if prices are trying to catch their breath.

More Information in our Economic Calendar.