Why Natural Gas Just Hit a 1-Week Peak

Nymex December nat-gas futures closed up 2.48% on Friday, touching 1-week highs. The culprit? Cold weather alerts heading into December.

What’s Moving Prices:

Forecasters are calling for a sharp temperature dip across the US—West and Northeast getting colder Nov 26-30, then the middle of the country dropping temps for Dec 1-5. In energy markets, cold = heating demand = nat-gas consumption boost.

Thursday’s EIA data also fueled the rally: nat-gas inventories contracted by 14 bcf for the week ending Nov 14, beating the -12 bcf consensus and undershooting the 5-year avg by a mile (+12 bcf typically). Translation: supply tightness narrative is back in play.

The Headwinds (Don’t Ignore These):

US nat-gas production is at near-record levels. EIA just bumped 2025 forecasts up 1.0% to 107.67 bcf/day. Active gas rigs hit a 2.25-year high at 128 (now sitting at 127). Lower-48 dry production? 111.1 bcf/day, up 7.9% year-over-year.

Meanwhile, demand is softer: Lower-48 gas demand clocked 82.8 bcf/day (-9.2% y/y). LNG export flows ticked down to 17.7 bcf/day.

The Bottom Line:

One cold snap and tight inventory data can push prices higher, but the structural story is still bearish—record production, growing rig counts, and weak demand outside of heating season. Watch if these weather forecasts actually materialize or if they’re just noise.

Storage context: US inventories down just 0.6% y/y but 3.8% above the 5-year seasonal norm. Europe’s at 81% full vs. 90% historical average. No panic signals yet.