Natural Gas Holds Near $4 Amid Falling Inventories and Colder Weather Forecasts

New York | EcoPulse24

U.S. natural gas prices continued their upward trend in today's trading, nearing $4 per million British thermal units (MMBtu). This follows a strong rebound from a two-month low of $3.76 recorded on December 24, driven by expectations of a colder winter that is increasing demand for gas-intensive heating.

This momentum comes amid updated weather forecasts pointing to a broader cold wave affecting most parts of the United States, resulting in a rise in priced heating degree days during the first two weeks of January. Utilities have responded by increasing their positions in near-term gas contracts to secure supplies.

Meanwhile, data from the U.S. Energy Information Administration (EIA) showed that natural gas inventories declined by 166 billion cubic feet in the week ending December 19. This drawdown matched market expectations but was higher than the seasonal average, bringing inventories below their five-year average, despite U.S. production remaining at record levels.

The inventory decline reflects growing international demand for U.S. gas, supported by expanded liquefied natural gas (LNG) export capacity and European sanctions on Russian gas, which have increased global dependence on U.S. supplies.

On a yearly basis, near-term U.S. natural gas futures are on track to post gains of around 10% since the start of the year, amid a mix of weather, geopolitical factors, and structural shifts in the global energy market.