The Energy Information Administration (EIA) reported a 125 Bcf withdrawal from storage for the week ending December 13, bringing inventories down to 3,622 Bcf. Despite stocks remaining 20 Bcf above last year's levels and 132 Bcf above the five-year average, the sizable draw highlights increasing heating demand. Production held steady at 103.8 Bcf/d, but with winter demand outpacing supply, futures found support at higher price levels.
On the weekly chart, natural gas futures decisively breached the October high of $3.647, confirming a breakout above key resistance. This move signals the potential for further gains, with the next significant resistance target near $4.300.
The $3.647 level, previously a notable resistance point, now serves as critical support following last week's close. Traders are expected to defend this area on any pullbacks, reinforcing the bullish technical structure. A sustained break below $3.647, however, could shift momentum, exposing futures to declines toward $2.977, the next key support zone.
Forecasts for January continue to point toward below-average temperatures, bolstering expectations for stronger heating demand. A cold front is anticipated to grip the Midwest and Northeast through the weekend, further increasing consumption as homes and businesses ramp up heating.
LNG exports remain a major driver of supply-side pressure, with feed gas demand hitting 15 Bcf/d as European and Asian buyers secure shipments. Additionally, freeze-off risks in the Gulf of Mexico and northern production regions are adding uncertainty to output, fueling further bullish sentiment. These supply-side constraints, combined with higher global demand, are likely to sustain elevated prices.
With natural gas futures clearing $3.647, the path toward $4.300 appears increasingly viable. A continuation of cold weather patterns, alongside tightening inventories and strong export activity, supports a bullish outlook into January.
In the event of a retracement, $2.977 will be closely monitored as primary support. Failure to hold this level could see futures test $2.588 by early spring, though prevailing fundamentals favor continued upside. Traders are positioning for stronger demand through January as colder weather drives increased consumption, reinforcing bullish momentum in the weeks ahead.