US natural gas price analysis as weather forecast reverses gains

US natural gas price dropped to its lowest level since late October 2025 as weather remains the market’s key driver. Forecasts of warmer-than-normal temperatures have dampened the demand outlook during the current winter season. Investors are keen on the weather forecasts and weekly storage data.  

Weather-driven volatility set to continue in the short term

Weather is usually a major influential factor in the natural gas supply/demand dynamics. Indeed, optimism over a surge in warming demand during the Northern Hemisphere’s winter season is what bolstered the US natural gas prices to a three-year high at $5.50 per MMBtu in early December 2025. 

However, that optimism has since dwindled due to the expected warmer-than-normal temperatures in most parts of the country. According to Fox Weather, lower 48 will likely be warmer and wetter in January than it has been so far in the current winter season. Besides, the La Niña setup that brought on the winter is expected to pause in January. 

In addition to the weather forecasts, investors will also be keen on the upcoming storage data. In its latest inventory report, the Energy Information Administration (EIA) noted that the total amount in storage is still within the 5-year average. However, as of 26th December, the inventory is 38 Bcf less than the amount recorded in the previous week. In the next storage report, signs of increased stockpiles may further dampen the demand outlook.  

Meanwhile, the US is set to ramp up natural gas production in 2026 as the new plants bolster its capacity. In the past year, LNG shipments from the US accounted for about a quarter of the global exports. Indeed, it became the first country to export over 100 million metric tonnes of LNG in a year. Besides, it recorded five monthly record highs in natural gas production. Even with the weather-caused volatility in prices, LNG exports are set to offer some support. 

US natural gas price technical analysis

Henry Hub natural gas futures began the new week in the red, extending previous losses to trade at a level last recorded in late October 2025. At the time of writing, it was trading at $3.48 per MMBtu after rebounding slightly from its intraday low of $3.40. Over a span of one week, it has dropped more than 15%; declining past the previously steady support zone of $4.00.

A look at its daily chart points to further selling pressure in the ensuing sessions. The US natural gas price has held below the short-term 25-day EMA and the medium-term 50-day MA. Besides, it is close to the oversold territory with an RSI of 34 and the indicator facing downwards. 

In the short term, the range between Monday’s intraday low at $3.40 and the previous support level of $3.64 will be worth watching. Beyond that tight range, I still expect the US natural gas price to trade within the wider range of between $3.17 and $3.75.