Nat-Gas Prices Fall on Warm US Weather Forecasts and Ample Inventories

December Nymex natural gas plunged 4.95% (-$0.226) Monday as warmer-than-normal Nov. 22–26 forecasts for the eastern U.S. combined with near-record domestic production and ample inventories to weigh on prices. The EIA raised its 2025 U.S. production forecast to 107.67 bcf/d and BNEF reports lower-48 dry gas at ~110 bcf/d (+7.1% y/y) versus lower demand of 84.7 bcf/d (-5.5% y/y); weekly EIA storage injections were +45 bcf (above consensus and the 5‑yr average), leaving stocks +4.5% above the 5‑yr seasonal norm. While U.S. power output is slightly higher and LNG flows remain sizable, the balance of stronger supply, elevated inventories and resilient rig counts points to continued near-term downside pressure on U.S. gas prices.

Analysis

December Nymex natural gas fell 4.95% (-$0.226) on Monday after forecasts for Nov. 22–26 showed warmer-than-normal weather across the eastern U.S., reducing near-term heating demand and prompting a sharp price reaction. The move was compounded by strength on the supply side, with the EIA raising its 2025 U.S. production forecast 1.0% to 107.67 bcf/day and Lower-48 dry gas at 110.0 bcf/day per BNEF, up 7.1% year-over-year.

Weekly fundamentals were bearish: the EIA reported a +45 bcf storage injection for the week ended Nov. 7 (above consensus +34 bcf and the 5‑yr average +35 bcf), leaving inventories -0.3% y/y and +4.5% above the 5‑yr seasonal norm, indicating ample supplies. Active gas rigs slipped to 125 from a 2.25‑year high of 128 but remain elevated versus last year's 94‑rig low, suggesting production resilience.

Offsetting upside drivers are modest: U.S. electricity output is slightly higher (+0.12% y/y for the week; +2.84% over 52 weeks) and LNG flows to U.S. terminals remain material at 17.6 bcf/day, while European storage sits at 82% of capacity versus a 5‑yr average of 91%. Absent a colder weather shift, reduced LNG flows, or sustained downward revisions to production, the balance of evidence supports continued near‑term downside pressure on nat‑gas prices.

Key Decisions for Investors

• Reduce or hedge short‑dated long exposures to U.S. natural gas given near‑term bearish catalysts (warmer forecasts, elevated production, above‑average inventories)
• Consider tactically bearish positions (front‑month futures or options structures, or calendar spreads) with conservative sizing while monitoring weekly EIA storage prints and weather revisions
• Use clear technical or data triggers to add long exposure: sustained downward revisions to production forecasts, consecutive storage misses relative to consensus, or a meaningful shift to colder eastern U.S. weather
• Monitor LNG net flows and European storage closely as upside risk factors; increased exports or faster European drawdowns would justify trimming bearish exposures