The cold wave and contract expiry jointly push U.S. natural gas futures toward a critical level.

Natural Gas Prices Rise: A Confluence of Technical and Weather Factors

On Tuesday (November 26), during the U.S. trading session, natural gas futures prices climbed due to cold wave expectations and the impending expiration of the December contract. Spot prices also rose across the United States. Cold weather is expected to cover much of the Midwest and Eastern United States, supporting price growth due to increased heating demand. Analysts point out that natural gas futures are currently trading near $3.497, having broken through the key 50% retracement level of $3.444.

In the short term, if natural gas prices can hold above $3.444, traders may target $3.637 and October's high of $3.647. A stronger bullish momentum might push prices further to levels of $4 or even $4.30, which would require sustained cold weather and robust market demand.

Technical Outlook: Upside Breakthrough or Testing Key Support

If it falls below the $3.444 support level, natural gas prices may see further softening, with a downward target of the 200-day moving average of $3.402. Should this moving average be breached, the market could test the 50-day moving average of $3.143, potentially dropping to the $3.118-$2.993 range. Technical analysts suggest that current market sentiment is quite sensitive, and traders should keep a close watch on changes in heating demand and technical level breakthroughs.

Weather Forecast: Cold Weather Dominates Supply and Demand Outlook

According to the latest weather models, a cold wave will impact the Midwest early this week and then extend to the East and South. Temperatures in the Midwest will drop to between 10 and 30 degrees Fahrenheit, while the East and South will remain mild early in the week with highs of 55 to 80 degrees Fahrenheit, before turning cold. This cold spell is expected to last until early December. However, the GFS model predicts some uncertainty in the strength of the cold wave, which could bring market volatility.

Market Focus: December Contract Volatility and Demand Prospects

As the December contract is about to expire, market volatility could intensify. Traders need to closely monitor changes in weather forecasts and critical technical level breakthroughs. If prices remain above $3.444, bullish trends may dominate market sentiment, with target prices possibly aiming for $3.647 or higher. However, failing to hold current key support levels could trigger greater sell-off pressure, especially if expectations for cold weather weaken.

With the official arrival of winter, the U.S. natural gas market supply and demand situation will be continuously influenced by changes in weather, so traders must stay alert to market dynamics and fundamental changes.

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

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