Natural gas prices opened the week higher on Monday as traders searched for signs of a market bottom, weighing colder U.S. weather forecasts, heavy recent selling, and key technical levels that could draw buyers back into the market.
Natural gas futures gapped higher at the start of Monday’s session after a steep selloff late last week, when prices fell sharply on heavy volume. The move reflects tentative bargain hunting rather than a clear trend reversal, analysts said, with traders focused on whether prices can hold recent lows.
Christopher Lewis, a market analyst, said the market appears to be stabilizing after what he described as a “washout” on Friday. “We have gotten so low on the chart that a certain amount of value hunting could happen,” Lewis said.
Cold Weather Outlook Shapes Near-Term Demand
Colder temperatures are forecast for parts of the United States later this week, a development that could boost heating demand and support prices. Analysts cautioned, however, that the duration of the cold spell will be critical in determining its impact on consumption.
“The next couple of days should be a little bit warmer, but this contract will be looking forward,” Lewis said. “It depends on how long the colder weather is projected to last.”
Seasonal trends typically favor higher natural gas prices during winter months, when heating demand peaks. Market participants said that the pattern remains intact, even as storage data and recent price action signal weaker-than-expected consumption so far this season.
The latest U.S. storage report showed less gas was withdrawn than anticipated, tempering bullish expectations. That data reinforced concerns that supply remains ample despite winter conditions, limiting the upside for prices in the near term.
Key Price Levels Test Trader Confidence
Technical levels are also guiding sentiment as traders look for confirmation that the market has found a floor. Lewis said the $3.50 level is a key psychological threshold that could attract additional buying interest if breached.
“I am watching the $3.50 level,” he said. “If buyers can get above there, then we will challenge the longer-term averages.”
A move above that level would put the fifty-day and two-hundred-day exponential moving averages into focus, levels often used by traders to assess longer-term momentum. Failure to clear those barriers could leave prices vulnerable to renewed selling.
Despite the recent volatility, Lewis said he has little appetite for betting on further declines at this time of year. “I have no interest in shortening it in January, regardless, and definitely not after we dropped the way we did,” he said.
Market Seeks Direction After Sharp Selloff
Friday’s sharp decline, marked by elevated trading volume, suggested forced selling or liquidation by some participants, analysts said. Such episodes can precede short-term rebounds, though they do not guarantee a sustained recovery.
Market participants said the coming days will likely determine whether the recent bounce develops into a broader rally or fades as weather forecasts and storage data evolve. Many expect at least one or two significant price swings before the end of winter.
For now, traders are balancing seasonal optimism against fundamental signals of softer demand. “It definitely is trying to find the bottom and turn around,” Lewis said, adding that a sustained move higher would be needed to confirm a shift in sentiment.
Natural gas prices remain sensitive to weather updates, inventory reports, and broader energy market trends. Until clearer signals emerge, analysts expect choppy trading as the market searches for direction.
