US Natural Gas price analysis as investors fixate their eyes past the horizon

US natural gas price ended last week slightly below the year-to-date high at $4.68 per MMBtu. This is after pulling back from its intraday high of $4.67; a few cents short of the month’s high at $4.69. 

Weather patterns remain a key market driver, with milder temperatures weighing on prices in the US and Europe. In the immediate term, US natural gas prices will likely continue trading sideways even as the Northern Hemisphere’s winter season limits losses. Investors are looking past the current weather pattern and onto December’s winter, which is expected to boost the heating demand. Besides, the market will be weighing the possibility of a peace deal to end the Russia-Ukraine war.

Weather forecasts favor near-term consolidation

Weather is one of the key drivers of natural gas prices as it defines the demand dynamics. Indeed, the recent gains have largely been fueled by the expectations of higher heating demand during the Northern Hemisphere’s winter season. 

However, forecasts of milder weather in the immediate term have curbed the upside potential; placing US natural gas prices in immediate-term consolidation. According to NatGasWeather.com, the start of the coming week will be warmer than normal in most parts of the US. 

More particularly, northern US will experience highs of 40s and 60s with the southern regions recording even higher temperatures. As the week progresses, frosty cold is expected in the Rockies and Northern Plains while weather in the rest of the country remains moderate.  

Notably, forecasts of milder weather have also impacted European natural gas prices. Indeed, the benchmark for Europe’s natural gas trading, Dutch TFF Natural Gas Futures, dropped to a level last recorded in May 2024. 

Besides, the market is eyeing a possible peace deal to end the Russia-Ukraine war. In regards to the plan presented by the US, the Ukranian President stated, “We agreed that our teams will work on the points to ensure it’s all genuine”.

While it is uncertain that the plan will go through, positive progress may weigh on natural gas prices as it could lead to the easing of some of the US sanctions on Russia’s energy exports. 

Natural gas price technical analysis

US natural gas price recorded its fifth consecutive week of gains as investors price in higher healing demand during the Northern Hemisphere’s winter season. However, it marked the second week of sideways trading as weather forecasters point to warmer weather in the immediate term. 

In the ensuing sessions, US natural gas prices will likely remain range-bound, even as the bulls are still in control. At an RSI of 66, the price may pullback slightly as the market fails to attract enough buyers to bolster it to the overbought territory.

As such, the tight range between the recently hit 8-month high of $4.69 and the support at $4.40 will be worth watching. In response to the forecasts of lower heating demand in the new week, the sellers may have an opportunity to retest the month’s low at $4.18.