Natural Gas Traders Await Reversal Confirmation
December natural gas futures are edging higher on Thursday after posting a potentially bearish closing price reversal top the previous session. On Wednesday, the nearby futures contract hit its highest level since October 13 at $3.397. Traders are now awaiting either a negation of the signal and a resumption of the uptrend, or a confirmation of the chart pattern and the start of a near-term correction.
At 13:58 GMT, December natural gas futures are trading at $3.299, up $0.084 or +2.61%.
Short-Lived Cold Forecast Brings in Sellers
Natural gas futures gave back early gains on Wednesday and settled lower after touching a three-week high. The jump in prices was fueled by earlier forecasts for colder weather and a drop in daily production. Sellers came in after updated forecasts showed renewed warmth, indicating that the cold air expected to move into the eastern United States next week may not last long enough to create a major demand event.
NatGasWeather sees light demand today, then moderate demand from Friday through Tuesday. The rest of the country is expected to remain fairly comfortable. Commodity Weather Group is calling for below-normal temperatures in the East from November 16 through November 20, but the forecast then turns back toward normal. Bullish traders had priced in the possibility of the cold temperatures extending beyond next Friday.
EIA Storage Report and Production in Focus
Today’s EIA storage report is the next major event. Traders are looking for a 63-65 Bcf build for the week ended November 6. This would be larger than the five-year average of 40 Bcf. Inventories were 1.4% above the five-year seasonal average as of October 30, showing supplies remain adequate heading into winter.
Natural Gas Price Forecast
Every new Natural Gas analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all Natural Gas forecastsA build near 66 Bcf today and a larger-than-normal print next week would put supplies near 3,900 Bcf and increase the surplus to near 100 Bcf.
Supply remains the other issue. The EIA raised its 2026 dry natural gas production forecast to 113 Bcf per day from 112.2 Bcf per day. Lower-48 dry gas production was estimated at 112.2 Bcf per day on Wednesday, while demand was 79.1 Bcf per day. LNG flows to U.S. export terminals were estimated at 20.6 Bcf per day.
December Natural Gas Futures Technical Analysis
December natural gas futures posted a potentially bearish closing price reversal top on Wednesday after hitting their highest level since October 13 at $3.397. So far, Thursday’s early trade has neither confirmed nor negated the chart pattern.
The main trend is up according to the daily swing chart. A trade through $3.397 will negate the chart pattern and signal a resumption of the uptrend. Taking out $2.830 will change the main trend to down.
A closing price reversal top is not a change in trend. A trade through $3.177 will confirm the chart pattern. This could lead to a 2-to-3-day correction, with the selling potentially reflecting the warmer forecast or a bearish EIA report.
The short-term range is $2.830 to $3.397. Its retracement zone at $3.114 to $3.047 is the first downside target.
The intermediate range is $3.652 to $2.830. The market tested its retracement zone at $3.241 to $3.338 on Wednesday. The rally stalled at $3.397 before selling pressure drove prices below the lower or 50% level at $3.241. The market then rebounded late in the session.
The long-term range is $5.164 to $2.830. Its retracement zone target is $3.997 to $4.272.
Wednesday’s rally also crossed to the strong side of the 50-day moving average at $3.324, but there wasn’t enough buying to sustain the move. December futures are trading below that level early Thursday. A return of colder weather to the forecast or a bullish EIA report could encourage traders to take another shot at overtaking the moving average.
What to Watch
My bias remains to the upside because traders have not confirmed the closing price reversal top and continue to threaten a breakout above the 50-day moving average. This could lead to another surge through $3.397 and a negation of the reversal top.
A trade through $3.177 will confirm the potentially bearish chart pattern. This will shift my bias to the downside at least temporarily. My near-term objective on this move will be the retracement zone at $3.114 to $3.047.
If enough buyers come in on a test of $3.114 to $3.047, then a secondary higher bottom could form. If confirmed, this could trigger the start of another rally. With enough momentum, buyers could make another attempt to overtake the 50-day moving average at $3.324, the intermediate 61.8% level at $3.338 and the main top at $3.397. Overcoming all of these levels would send a bullish signal.
If $3.047 fails to stop the selling pressure, then the decline could extend toward the main bottom at $2.830.
The market needed a longer-lasting cold forecast to keep buyers chasing the rally. Instead, the latest forecasts gave longs a reason to take some profits off the table. The rally is not necessarily over, but buyers will need more than a brief cold shot to stay in control.
The fund position remains a wild card. Hedge funds may have covered some of their net short positions during this week’s rally, but the market could still be vulnerable to another round of short-covering if colder forecasts return or the storage number comes in tighter than expected.
More Information in our Economic Calendar.