As we share below, courtesy of FinViz, prices have risen by over 50% since late October. Moreover, natural gas prices, approaching $5, are at three-year highs. The primary cause of the recent price surge is increased heating demand driven by colder-than-expected winter weather, which is resulting in greater-than-average inventory draws.
Per the EIA, natural gas stocks are projected to tighten significantly heading into 2026, despite starting the season above five-year averages. Weather is the primary driver of fluctuations in natural gas demand and prices, but increasingly, the buildout of energy-intensive data centers and liquefied natural gas (LNG) facilities is setting a rising floor under natural gas prices.
While demand is amplified by the massive growth of power-intensive data centers, which investors well know, it’s also worth noting the sharp increase in demand from liquefied natural gas exports. According to the Energy Information Administration’s (EIA) November 2025 Short-Term Energy Outlook (STEO), LNG exports are projected to average 14.9 billion cubic feet per day (Bcf/d) in 2025, a 25% increase from 2024 levels.
Furthermore, they expect it to increase further to 16.3 Bcf/d in 2026 (up 10% from 2025). While weather trends remain the predominant short-term driver of natural gas prices, LNG exports and increased data center usage will boost demand, likely keeping a slowly increasing floor under natural gas prices.
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The ADP Report Warrants A Fed Cut
The monthly released yesterday showed continued deterioration in the labor market. ADP reported the economy lost 37k jobs. The Wall Street consensus was for a 10k pickup. The graph below shows that the three-month average for ADP is now negative for the first time since the early days of the Pandemic. is delayed due to the government shutdown.
Notably, the ADP monthly report shows that the Northeast region lost 100k jobs, and the small-business sector reduced its workforce by 120k. The second graphic below, courtesy of ZeroHedge, highlights other factors impacting the aggregate number of job losses.
The Fed Funds market is now pricing in a 90% chance the at next week’s meeting. Without BLS data and updated inflation data, the weakness seen in the ADP report and other private-sector reports will likely be enough to secure a majority in favor of cutting rates. The jobs data may also warrant a couple of FOMC members to vote for a 50bps rate cut. Currently, the Fed Funds futures market assigns a zero probability of a 50bps cut.
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