U.S. natural gas is catching a bid today with two drivers, Art Hogan, Chief Market Strategist at B. Riley Wealth, told Rigzone in an exclusive interview on Thursday.

“On the fundamental side, we have seen forecasts that indicated the potential for cooler air creeping into the Lower 48 to start the new year,” he said.

“On the technical side, we saw a higher low this week, at $3.20 per million British thermal units (MMBtu), than last week, at $3.10 MMBtu, and as such traders are looking for a potential breakout above $3.50 MMBtu,” he added.

“More seasonally appropriate weather, combined with price momentum, seem to be the drivers of price this week,” he continued.

In a separate exclusive interview today, David Seduski, the head of North American gas at Energy Aspects, said “the rally in Henry Hub recently stems from expectations for a colder weather pattern in the U.S. in January”.

“The Christmas to New Year’s week looks like it will be very mild, but there are initial indications that an Alaska Ridge system is forming that typically corresponds with cold temperatures in the United States,” Seduski told Rigzone.

“Essentially, a high-pressure system forms over Alaska and that pushes cold air that typically would move from the arctic into Alaska and funnels it to the United States,” he added.

“If that system fully forms there is certainly a case for higher prices, but the temperatures wouldn’t happen until mid-January probably,” he continued.

“We’ve seen the prompt contract move up all week, but the rest of the curve has seen muted support given weather beyond even early January is very prone to forecast revisions,” Seduski went on to state.

The Energy Aspects representative also told Rigzone that there’s probably some short covering helping boost the rally.

“There’s still a lot of short positions in the market, and as the market moves higher we may be seeing some scrambling to cover in case the January weather pattern does develop and trend colder,” he said.

In another exclusive interview on Thursday, Phil Flynn, a senior market analyst at the PRICE Futures Group, told Rigzone that natural gas is rising “as the U.S. barrels in for the coldest blast of the season”.

“A cold start to winter is increasing the odds that we may see the coldest winter in years,” Flynn said.

“January forecasts are going to be the key … If they trend colder then natural gas will trend higher,” he added.

The U.S. Energy Information Administration (EIA) raised its Henry Hub natural gas spot price forecast for this year and next year in its latest short term energy outlook (STEO), which was released recently.

According to its December STEO, the EIA sees the Henry Hub spot price averaging $2.19 per million British thermal units (MMBtu) in 2024 and $2.95 per MMBtu in 2025. The EIA’s previous STEO, which was released in November, projected that the Henry Hub spot price would average $2.17 per MMBtu in 2024 and $2.90 per MMBtu in 2025.

To contact the author, email andreas.exarheas@rigzone.com