Natural Gas News: Futures Climb as Weather Models Trigger Demand Spike
On Friday, January Natural Gas Futures settled at $4.850, up $0.292 or +6.41%.
Is the Weather Forecast the Game-Changer for Winter Demand?
The sudden turn in short-term weather expectations has reignited bullish sentiment. Forecasts now call for below-normal temperatures in the first week of December across heavily populated regions. This cold snap is likely to push up consumption, just as early winter heating demand begins to build. Power sector usage is also showing signs of strength, with U.S. lower-48 electricity output rising 5.33% y/y in the week ending November 15, according to the Edison Electric Institute.
Supply Growth Remains a Limiting Factor
Despite the weather-driven price rally, structural headwinds remain in place. U.S. dry gas production hit a record 113.4 bcf/day on Friday, up 8.3% y/y, according to BNEF. The EIA also raised its 2025 production forecast to 107.67 bcf/day, reflecting confidence in continued supply expansion.
Rig activity confirms the trend: Baker Hughes reported a rise of three active gas rigs last week, bringing the total to 130 — a 2.25-year high. The steady build in supply continues to cap long-term upside, despite short-term demand optimism.
Storage Data Signals Adequate Supply Coverage
Last week’s EIA storage report showed a larger-than-expected withdrawal of 11 bcf, compared to consensus estimates of 9 bcf. However, inventories remain healthy, sitting 4.2% above the five-year average, despite being down 0.8% y/y.
This suggests the market is well-supplied heading into the cold season. On a global scale, European gas storage remains robust at 77% capacity, though down from the five-year average of 88%, offering some additional price support.
