Medium-term trend will allow gas prices to return to the 3.8 level

Gas prices in the US ended 2024 with a strong upward momentum. However, this movement didn’t continue in the first days of January, with quotes falling into the range of 3.4–3.7. Nevertheless, the gas price is supported by a medium-term trend stretching from the October lows. With its help, gas prices may soon return to the level of 3.8 and try to renew local highs.

A new report from BofA Global Research points to the elimination of nearly 80% of the gas surplus accumulated in US reserves due to the warm winter of 2023/2024. The surplus, which peaked at 678 billion cubic feet, had shrunk to just 154 billion cubic feet by the end of last year. This process was facilitated by strong demand growth from the power sector, which is attracted by inexpensive gas.

Analysts at BofA Global Research expect the trend toward increased gas consumption to continue into 2025. They estimate that US gas demand will increase by an additional 2.5 billion cubic feet per day, offsetting the 2.1 billion cubic feet per day production growth. Industry companies are pinning their hopes on Donald Trump’s return to office and lifting of restrictions on US LNG exports. The increased liquefied fuel capacity will require additional feedstock supplies.

In its December report, the US Energy Information Administration (EIA) gave a relatively modest forecast for gas prices in Q1 2025. The figure of $2.95 per million British thermal units was mentioned. At the same time, Standard Chartered analysts expect the average gas price at the level of $3.2. The next EIA report will be published on January 14, and if the forecast is revised upward, prices will receive good support.

As long as gas quotes haven’t consolidated below the uptrend line and the 3.45 mark, the main scenario remains a new growth momentum to the 3.8 level.

The following trading strategy can be suggested:

Buy gas at the current price. Take profit — 3.8. Stop loss — 3.45.