Natural Gas Plummets on Milder Weather Forecasts and High Production

Weather-Driven Demand Destruction

The crucial winter heating season demand is not materializing as anticipated. Long-range forecasts continue to predict above-average temperatures across key US consumption regions, drastically reducing the need for space heating. This lack of demand has led to aggressive liquidation of long positions by market speculators.

Production Glut

US dry natural gas production remains resilient, operating at near-record levels. This consistent high supply ensures that storage levels are comfortable, currently sitting above the five-year average. The market currently has ample gas to meet the subdued winter demand without causing a price spike.

LNG as a Floor

Liquefied Natural Gas (LNG) exports continue to run at maximum capacity, providing the only structural price floor by removing a large amount of domestic supply. However, this bullish factor is currently insufficient to overcome the bearish combination of weak weather and high production.