Natural gas futures rose on Wednesday due to strong demand caused by weather in the United States. This increased demand coincides with limited supply due to some production freeze-offs.
Despite prices dipping in the previous session, cold forecasts for the third week of January are causing a bullish rebound, according to a note from Eli Rubin of EBW Analytics.
Rubin pointed out that the market is underestimating the scale of the significant national storage draws expected to take place in January. He added that the freeze-off period could be longer than initially thought.
Below-average storage draws for the prior week are expected to be reported by the Energy Information Administration (EIA) at 12 p.m. ET. This is expected to be followed by larger inventory draws in the coming weeks.
The combination of high demand and limited supply is fueling the rise in natural gas futures.
