Natural gas futures experienced a significant decline on January 14, 2025, driven by a combination of factors that have softened demand expectations. The market reacted to forecasts predicting warmer weather for the latter part of January, which has reduced the immediate need for heating. Additionally, liquefied natural gas (LNG) demand has weakened, further contributing to the bearish sentiment. The February Nymex natural gas futures dropped to $3.755/MMBtu early in the day, reflecting the market's struggle to find a stable floor amid volatile trading conditions. Traders are also cautious due to the upcoming contract rollover from February to March, which typically adds to market uncertainty.
Technical analysis indicates that natural gas prices have been unable to sustain levels above the critical $3.850 mark, a key pivot point for determining near-term market direction. The failure to hold this level has emboldened bearish traders, with hedge funds reportedly selling into rallies rather than buying dips. Despite the colder-than-normal temperatures in the U.S. supporting short-term demand, the overall market sentiment remains bearish due to the anticipated warmer weather patterns and the cyclical nature of the natural gas market as it approaches the end of the winter trading season.
The ProShares UltraShort Bloomberg Natural Gas ETF (KOLD) rose to $35.46, up 4.14% as of 10:00 AM ET on January 14, 2025.