Natural Gas Prices Forecast: Futures Soar on Cold Weather, EIA Supply Drop

James Hyerczyk
Updated: Jan 4, 2024, 15:26 GMT+00:00

U.S. natural gas futures hit a one-month peak, spurred by production cuts and cold forecasts, with focus on the upcoming EIA report.

Natural Gas Prices Forecast

In this article:

Key Points

  • Production drop and cold weather push natural gas prices up
  • Market anticipates EIA report on storage withdrawals
  • Germany’s LNG import strategy alters global gas dynamics

Colder Weather and Output Drop Fuel Price Increase

U.S. natural gas futures are witnessing a significant rise, reaching a one-month high, driven by a drop in daily production and forecasts for colder weather. These conditions are expected to increase heating demand over the next two weeks, pushing futures up by about 4%.

NatGasWeather and EIA Report Forecasts

NatGasWeather forecasts diverse weather conditions across the U.S., indicating moderate demand in the coming days. In tandem, the market is eyeing the Energy Information Administration (EIA) weekly storage report. Analysts predict a smaller-than-usual withdrawal from storage for the week ended Dec. 29, estimating a decrease of around 40 billion cubic feet (bcf), notably lower than the five-year average.

Global Context: Germany’s Energy Strategy

Internationally, Germany’s significant reduction in gas imports, a response to Russia’s export stoppage, is reshaping the global energy market. The nation’s turn to LNG imports from various global sources, including the U.S., reflects adaptive strategies in response to changing energy supply dynamics.

Short-Term Outlook

Considering the reduced output, colder weather forecasts, and expectations set by the EIA report, the short-term outlook for U.S. natural gas futures is bullish. The market is responding to immediate environmental factors and supply adjustments, pointing towards an upward trend in prices in the near term. However, traders should remain vigilant for any shifts in weather patterns or production changes that could impact this trajectory.

Natural Gas Technical Analysis

Daily Natural Gas

The current market sentiment for Natural Gas is cautiously bullish. The daily price at 2.785 is positioned between the 50-day moving average of 2.824 and the 200-day moving average of 3.082, indicating a neutral to slightly bullish trend.

The price is currently above the minor support level of 2.690 and approaching the minor resistance at 2.838, which could act as a pivot for further upward movement. Surpassing this minor resistance may lead towards testing the main resistance at 3.002. The lack of trend line support or resistance leaves room for potential volatility.

Overall, the positioning of the price in relation to the moving averages and support levels suggests a cautious optimism in the market, with attention focused on the upcoming resistance levels.

Further reaction to the shorter-term 50-day moving average at 2.824 sets the tone after the EIA report and into the close.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

Did you find this article useful?