According to AccuWeather, a powerful Arctic cold front is expected to sweep across the United States, reaching as far south as the southern states and bringing lower temperatures to more than 150 million people across 24 states.

On Thursday, Texas Governor Abbott declared a state of emergency in more than half of the state's counties ahead of the cold snap. It is worth noting that Texas is home to key natural gas production facilities, while its infrastructure is less adapted to prolonged cold weather.

As a result, market sentiment is being shaped both by expectations of higher natural gas demand for heating and by the risk of technical disruptions to production.

Consequently, the XNG/USD chart shows a sharp rise in natural gas prices, with the move from last week's low to the recent high amounting to nearly 40%.

Technical Analysis of the XNG/USD Chart

When analysing gas prices on 15 January, we identified a long-term descending channel, highlighted in red on the chart. At that time, we also:

→ noted that prices were hovering near the 2025 low;→ suggested that bears might attempt to break below the 2025 low, which could have a psychological impact on the market, prompting short sellers to take profits and encouraging renewed buying interest.

Indeed, following a false bearish break of the 2025 low (as indicated by the arrow), prices surged sharply towards the median of the channel, an area where supply and demand often tend to balance.

Moreover, around the 3.330 level, there was a clear period of imbalance in favour of buyers. Bulls broke through the descending trendline resistance, and XNG/USD rose with minimal pullbacks.

From a technical perspective, it is therefore possible that this area may now act as support. However, the actual path of the natural gas market will largely depend on the severity of the cold weather and its impact on conditions across the country.

Source: FXOpen