December Nymex natural gas prices rallied 4.25% to a seven-month high, primarily driven by forecasts for colder U.S. temperatures in November, which are expected to increase heating demand. This upward movement occurred despite robust underlying supply fundamentals, including near-record U.S. dry gas production, adequate domestic inventories that are above their five-year seasonal average, and an increase in active drilling rigs to a 2.25-year high. The market's reaction underscores its sensitivity to short-term weather outlooks, even as long-term supply indicators suggest ample availability.
December Nymex natural gas futures (NGZ25) surged +4.25% to a seven-month high, primarily driven by updated weather forecasts predicting colder temperatures in the US Midwest and East from November 10-14. This outlook is expected to significantly boost heating demand, overriding other market signals. Despite this price rally, underlying supply fundamentals remain robust, with US dry gas production at 108.9 bcf/day, marking a +6.6% year-over-year increase and nearing record highs. The EIA also raised its 2025 production forecast by +0.5% to 107.14 bcf/day, supported by active US nat-gas rigs reaching a 2.25-year high of 125. US natural gas inventories are currently +4.6% above their five-year seasonal average, indicating adequate domestic supply. Demand indicators also show strength, with US lower-48 gas demand up +10.4% year-over-year and LNG net flows increasing +4.7% week-over-week. The market's current sensitivity to short-term weather patterns underscores a dynamic where immediate demand spikes can temporarily outweigh strong long-term supply and inventory levels.
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