Natural gas (NG=F) consumption hit new daily highs in January amid freezing temperatures. Despite the higher demand, prices are still in bearish territory.

"While the longer-term weather forecasts are turning colder, it seems it’s too little too late," Dennis Kissler, senior vice president at BOK Financial, said on Tuesday.

Natural gas futures are down about 44% year to date, nearing $2 per million British thermal units (mBTU).

“Well-below-normal temperatures caused by a large mass of arctic air that covered most of the continental United States increased demand of natural gas used for residential and commercial space heating and for electric power generation,” according to a recent report from the Energy Information Administration on Tuesday.

EIA data shows consumption of natural gas and withdrawals from underground storage increased to record volumes. Residential and commercial natural gas consumption accounted for almost 49% of consumption in the lower 48 states the week of Jan. 14, up from 42% at the start of the month, "as homes and commercial buildings used more natural gas for heating. Electricity generation also increased during that time,” said the report.

Prices have remained bearish amid a massive supply in the last year. More efficient oil drilling has resulted in greater quantities of natural gas, a by-product of crude production.

"What we’re seeing [is] driven by the Permian shale plays," Ed Hirs, senior fellow at the University of Houston, told Yahoo Finance."As the operators drill for more oil, they tend to get the more oil rich plays first. Then the gas-oil ratio increases."

Kissler also noted that a "lack of demand from an abnormally cool summer in 2023 and an abnormally warm winter" have kept current storage 5.2% above the five-year average.

Despite more supply, demand is expected to increase longer term as governments implement more energy transition initiatives — and as Europe requires more liquified natural gas imports in an effort to become less dependent on Russia.

"The demand in [natural gas] continues to expand as the cleaner fuel alternative," said Kissler.

"While green energy is also expanding, it will have to be led by natural gas," he added.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.