Natural Gas Plunges Further on Sustained Milder Weather Forecasts

Weather Dominates Price Action

The natural gas market is almost entirely dictated by winter weather forecasts. The persistent prediction of milder temperatures through the end of December has caused massive liquidation of long positions by hedge funds. The resulting lack of peak heating demand is leaving supply ample relative to consumption.

High Production Resilience

US domestic natural gas production continues to hover near record highs, effectively saturating the market. This robust supply, combined with the subdued demand outlook, maintains a comfortable storage cushion that is well above historical averages, removing the 'scarcity risk' from the market.

LNG Export as a Price Floor

The only significant bullish counterweight is the strong demand for US LNG exports, which are running at near-full capacity to meet European and Asian needs. While this off-take prevents a total price collapse, it is currently not enough to overcome the bearish pressure from domestic weather and production trends.