Natural Gas Edges Higher as Cold Weather Sets the Tone

Natural gas futures are firming up again on Friday, with the January contract eyeing a potential breakout toward the

$5.341 level. The move comes as colder-than-normal weather forecasts tighten the near-term outlook, injecting volatility

back into a market that had already been heating up this week. Traders now face a classic setup: buy into strength or

wait for a pullback. Either way, risk is on the table.

At 13:17 GMT, January Natural Gas Futures are trading $5.225, up $0.162 or +3.20%.

Is the Cold Snap Enough to Sustain the Rally?

Prices climbed 1.36% on Thursday, recovering from early session losses to hit their highest level in nearly three years.

The driver? Fresh forecasts from Atmospheric G2 showing sub-normal temperatures across the eastern U.S. from December

9–13. That’s pushing expectations for stronger heating demand, a key seasonal tailwind. Traders have seen this pattern

before — winter risk premium creeping in fast, and positioning tends to follow.

Still, not all the data was bullish. The EIA reported a storage draw of just 12 bcf for the week ending November 28,

well below expectations for an 18 bcf drop. The five-year average draw for this week is 43 bcf. That’s a miss, and it

shows inventories remain comfortable — now 5.1% above the five-year average, even if they’re slightly below last year’s

levels. Bottom line: storage isn’t screaming scarcity.

Strong Demand, But Supply Isn’t Backing Off

On the production front, dry gas output hit 111.5 bcf/day on Thursday, up more than 6% from a year ago. And despite the

cold snap, supply hasn’t flinched. In fact, active rigs climbed to 130 last week, a 2.25-year high. That supply

confidence might cap upside in the near term unless weather turns severe.

Demand is holding up. Thursday’s lower-48 consumption hit 118.1 bcf/day — a 12% jump year-over-year. Meanwhile, LNG

flows ticked down slightly to 17.7 bcf/day, but that’s still a historically strong level. Power burn is also supportive:

U.S. electricity output rose 2.1% y/y last week, with a 3% gain over the trailing 12 months. Traders are watching for

whether this demand can keep pace with elevated production — or if another storage miss cools the rally.

Can Prices Push Through Resistance — or Will the Dip Get Bought?

The technicals are lining up. Resistance sits at $5.341, and price action is flirting with that breakout zone. If bulls

punch through, we could see another leg higher — but it’s not a sure thing. On the downside, key support comes in at

$4.953, with the 200-day moving average just below at $4.731. That dip zone could attract buyers if the rally stalls or

if weather models shift.

Short-Term Outlook: Bullish, With a Weather-Driven Caveat

The market remains bullish short-term, but this is a weather trade — and weather trades cut both ways. If cold holds,

momentum likely continues. But any moderation in the forecast, or another soft EIA print, could open the door for

profit-taking. Traders should stay nimble. This isn’t a time to get complacent.