Natural Gas Price (NG=F) Near $5: Cold Weather and LNG Demand Power a Bullish Winter Rally

Natural Gas (NG=F) Tests Multi-Year Highs Amid Record Output and Tight Weather-Driven Volatility

Natural Gas futures (NG=F) have surged toward a 36-month high of $4.95 per mmBtu, confirming a technical breakout through the $4.90 March ceiling, while simultaneously facing pressure from record production and near-saturated storage levels. The January front-month contract on the New York Mercantile Exchange trades around $4.89, down 0.7% on the session, yet remains up 17.6% for November, marking one of its strongest monthly gains since 2022. Traders are caught between two conflicting dynamics—accelerating supply growth across the U.S. Lower 48 states and a cold-leaning weather pattern sustaining robust heating demand into early December.

Record U.S. Production and Storage Surplus Create Supply Drag

Average U.S. natural gas output in November hit an all-time record of 109.6 billion cubic feet per day (bcfd), up from 107 bcfd in October, exceeding the previous record of 108 bcfd in August. Total Lower 48 dry gas production reached 110.7 bcfd last week, supported by 9.6 bcfd imports from Canada, keeping total supply above 120 bcfd—13% higher than the five-year November average. Storage remains overstocked at 3,935 bcf, approximately 4.2% above the five-year norm, reflecting the cumulative effect of mild autumn temperatures and consistent output. Despite that, weekly withdrawals began accelerating with an 11 bcf draw for the week ending November 21, suggesting early winter consumption is now overtaking injections.

Heating Demand Spikes as Cold Front Expands

Weather remains the single largest determinant of NG=F price momentum. The U.S. Global Forecast System (GFS) projects 405 Heating Degree Days (HDD) over the next two weeks—above both the 10-year (342) and 30-year norms (372), reinforcing expectations for above-average gas usage through mid-December. Total U.S. consumption has surged to 114.3 bcfd, up nearly 20% month-over-month, with residential demand climbing to 29.3 bcfd and commercial consumption at 17.4 bcfd. Power generation demand also firmed to 32.9 bcfd, maintaining gas’s dominant 39–40% share of total U.S. electricity mix, while coal sits near 18%.

LNG Exports Hit Record Highs as U.S. Becomes Global Price Anchor

LNG flows continue setting records. Feedgas deliveries to U.S. export terminals hit 18.8 bcfd—an all-time high—beating the October record of 16.6 bcfd. Export capacity utilization across the eight operating plants averages 95%, while the Golden Pass LNG terminal prepares for commissioning early next quarter, expected to add another 2 bcfd of throughput. Europe’s TTF benchmark trades at $9.54/mmBtu, down from $13.89 last year, and Asia’s JKM index at $11.07/mmBtu, both reflecting ample LNG availability. The U.S. now effectively anchors global gas prices, with the Henry Hub (NG1!) at $4.94/mmBtu, up 65% from the 2024 average but still less than half the European equivalent.

Geopolitical Undercurrents: Ukraine Attacks and Russian Output Shifts

The market is shadowed by geopolitical noise—Ukraine’s state producer Naftogaz reported Russian attacks on gas storage and production sites early Tuesday, threatening localized supply disruptions. Yet, this has had muted global impact given the strength of U.S. LNG supply and increased flows from Russia to Asia. Russian LNG exports to China rose 73% YoY to 1.299 million tons in September, positioning Russia third behind Australia and Qatar. Combined Russian gas shipments to China hit 4.078 bcm monthly, up 37% year-on-year, intensifying global supply competition and capping Asian LNG price escalation.

Technical Outlook: Ascending Triangle Confirms Bull Market Structure

From a technical perspective, NG=F remains decisively bullish. The clean breakout through $4.90 validates a 36-month continuation pattern, confirming an ascending triangle with an upside Fibonacci roadmap extending toward $5.28, $5.52, and $5.78. The 10-day moving average currently supports at $4.78, while the 20-day line near $4.65 acts as secondary support. Each pullback to these averages has triggered renewed buying, a textbook pattern of trend confirmation. The market’s RSI remains near 68, suggesting mild overbought conditions but not extreme—buyers retain control unless $4.78 is decisively breached.

Short-Term Volatility and Algorithmic Selling Pressure

Despite strength, speculative positioning indicates near-term caution. Momentum traders took profits after the three-day rally to $4.95, and algorithmic models registered overbought signals across intraday charts. A brief 0.7% correction on Tuesday followed, yet volume remained elevated—evidence of consolidation, not liquidation. Henry Hub next-day physical prices rose sharply, with Algonquin Citygate spiking to $13.00/mmBtu due to Northeast heating demand. Elsewhere, Chicago Citygate firmed to $4.45, and Transco Zone 6 New York settled at $5.23, underscoring regional tightness.

Global Disparities Reflect Diverging Demand Dynamics

While the U.S. market rallies, Europe faces persistent oversupply. The region’s warmer weather and LNG oversaturation drove TTF’s nine-day losing streak, marking its lowest seasonal price in over a year. Asia’s demand remains more stable but capped by increased Russian and Qatari inflows. European storage sits nearly 95% full, compared to 87% last year, suppressing price volatility despite intermittent cold snaps. The contrast highlights the U.S. as the only major market simultaneously expanding both production and exports, an unprecedented position that buffers domestic prices even under strong demand.

Sectoral Consumption and Power Mix Shifts

Industrial consumption of gas has rebounded modestly to 26.1 bcfd, up from 24.3 last month, while vehicle and plant fuel demand remains steady at 5.5 bcfd. Renewables now account for 21% nuclear, 11% wind, and 5% solar generation—further evidence that gas remains irreplaceable in the near-term power mix, particularly during winter. The correlation between total gas-fired generation (39%) and HDD spikes remains nearly one-to-one, meaning even marginal temperature drops can generate exponential load increases, a key bullish driver during Arctic weather patterns.

Technical Risk Zones and Momentum Confirmation Levels

If NG=F sustains above $4.90 on a daily close, the path toward $5.28–$5.78 remains intact, supported by a robust moving-average structure. A close below $4.70 would signal early exhaustion and trigger retests toward $4.45, though underlying fundamentals argue against deep correction unless winter forecasts reverse. The EIA’s expected 18 bcf withdrawal for the week ending Nov. 28 adds weight to bullish conviction, as consistent draws will likely reduce the storage surplus below 3% by late December.

Outlook and Market Bias

Natural Gas (NG=F) trades at the crossroads of record supply and resurgent demand. The structural breakout above $4.90 confirms a long-term bullish reversal pattern, supported by seasonal consumption, LNG strength, and tightening physical inventories. Although overbought technicals may trigger intermittent pullbacks, fundamentals suggest a continuation of the rally toward $5.28–$5.52, potentially $5.78 if cold weather persists into January. The 10- and 20-day moving averages remain critical barometers of trend health.

Verdict: BUY – Momentum and demand fundamentals outweigh supply risk. Accumulate on pullbacks toward $4.70–$4.80, with targets at $5.28 short-term and $5.78 medium-term. Natural Gas remains positioned for a structurally bullish winter, driven by record LNG exports, seasonal heating demand, and the technical validation of its multi-year breakout.

That's TradingNEWS