Natural gas price: Analysis of the weather-driven market in the US and Europe
US natural gas price eased on its downtrend after four consecutive sessions in the red. The recorded surge in exports has contributed to the rally observed in Q4’25. However, price movements in recent weeks have highlighted that the market is largely weather-driven.
On the one hand, expectations of heightened demand at the peak of the winter season are what bolstered Henry Hub natural gas price to a three-year high close to two weeks ago. In the same way, warmer-than-expected weather forecasts have erased some of the recent gains. Meanwhile, Europe’s benchmark Dutch TTF have edged higher amid forecasts of colder temperatures.
Weather forecast yields divergence in US, Europe natural gas prices
Weather remains one of the key drivers of natural gas prices. Indeed, the US and European markets are responding divergently to the same factor. On the one hand, the US natural gas prices are under selling pressure as weather experts forecast warmer-than-expected temperatures in the near term.
According to NatGasWeather.com, warmer-than-normal temperatures are expected in most parts of the US. For the period between December 17th and 27th, the weather pattern appears to be too warm; signaling a possibility for cooler trends in the coming days.
Nonetheless, the cold may not yield enough momentum to bolster natural gas prices back to the month’s high above $5 per MMBtu. In addition to the weather pattern, the adequate inventories and surge in production further support this thesis.
In Europe, the benchmark Dutch TTF natural gas futures edged higher to $27.37 Euros per MWh as at the time of writing. The surge is in reaction to the weather forecast of colder and calmer weather in the immediate term. This outlook has pointed to a rise in heating demand, at a time when the Freeport LNG plant in Texas has reported an outage.
The major US facility is a key source of liquefied natural gas for Europe. As such, prolonged disruptions may impact supply to Europe during the winter season.
US natural gas price technical analysis
Henry Hub natural gas futures paused on its decline on Wednesday after being on a downtrend for close to two weeks now. Earlier in the month, the benchmark for US natural gas prices hit a three-year high at $5.50 per MMBtu. It has since erased the gains recorded in November; reaching its lowest level since 31st October on Tuesday at $3.84.
On Wednesday, it rebounded slightly to $3.96 as at the time of writing. In the near term, the asset may remain under selling pressure as the market remains largely weather-driven.
A look at its daily chart shows it trading below the 25 and 50-day EMAs. Besides, at an RSI of 39, the possible rebound may be curbed as it approaches the neutral zone of 50.
In line with these technical indicators, the range between the lower Bollinger band at $3.81 and the medium-term 50-day EMA at $4.17 is worth watching in the ensuing sessions. If the lower natural gas prices attract more buyers, it may rebound further to the upper resistance zone of $4.35.
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