"It appears that the dramatic price spike since early last week has been overcooked within the context of cold weather forecasts that are beginning to see some moderation beyond next week," said Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates.
"While arctic air will be moving across virtually the entirety of the US next week, driving another huge storage withdrawal, this factor has also been priced in with the market beginning to shift focus to some expected moderation within the 8- to 14-day time frame."
The US Energy Information Administration on Thursday said utilities pulled 237 billion cubic feet (bcf) of natural gas from storage during the week ended December 23.
That was more than analysts' consensus estimate in a Reuters poll for a draw of 222 bcf.
The front month has had a volatile run the past several weeks. It rose over 7 percent last week, but dropped 9 percent a week before. It rose 11.5 percent in December.
Longer term, the latest weather models forecast slightly colder-than-normal temperatures in January and February before turning warmer than normal in March.
Thomson Reuters projects US gas demand at 90.8 billion cubic feet per day on average temperatures leading into the New Year's holiday weekend and a rise to 100.1 bcfd next week on colder weather.