Natural gas prices are holding steady as traders await the next Energy Information Administration (EIA) storage report, expected to play a pivotal role in shaping near-term market direction. With futures trading near the $3.766 technical level, the market remains in a fragile state. A bullish report could push prices past key resistance, while a bearish result may trigger a selloff toward lower support levels.
Conflicting weather data continues to inject uncertainty into price action, according to NatGasWeather. The American model added two heating degree days (HDD) earlier in the week, suggesting stronger demand, while the European model shaved off eight HDDs, hinting at milder conditions. Although both models anticipate cold temperatures over the next two weeks, the discrepancy in severity could weigh heavily on market sentiment. Any alignment between models favoring colder conditions would likely fuel upward momentum.
Demand remains elevated as bitter cold grips the interior U.S., pushing temperatures into negative territory in northern states and keeping Southern regions chilly overnight. Daytime highs struggle to reach freezing across much of the Midwest and Northeast, reinforcing the need for heating. This pattern is forecasted to hold through January 18 before a brief moderation, with another cold front potentially extending demand strength into late January. The West Coast, by contrast, continues to experience milder weather.
Market participants are closely monitoring the upcoming EIA storage report, which will be released early due to a government holiday. Current projections point to a 39 Bcf withdrawal, reflecting ongoing winter demand but less severe than last week's 116 Bcf draw. Storage levels, now at 3,413 Bcf, remain 67 Bcf below last year's figures but 154 Bcf above the five-year average. A larger-than-expected draw could tighten the market further, lending support to prices. Conversely, a lighter withdrawal may reinforce the view that supply remains sufficient.