At 14:38 GMT, January Natural Gas Futures are trading $4.737, down $0.175 or -3.56%.
Are Traders Losing Confidence in the Winter Heating Season?
Forecasts from NatGasWeather and other providers suggest moderating demand in the coming days, with cold conditions giving way to seasonal or above-average temperatures in key regions. While national demand is high early in the week, it is expected to moderate midweek before ticking higher again over the weekend. However, the broader December pattern has warmed, and cold air remains locked in Canada.
This weather shift follows a sharp rally last week, when prices surged to near three-year highs on the back of below-normal temperatures and tightening storage. But the Monday and Tuesday selloff has erased much of that gain, with traders now reassessing how much heating-driven demand will actually materialize before year-end.
Do Supply Levels Justify the Recent Selloff?
From a supply standpoint, U.S. dry gas production remains robust at 113.1 Bcf/d, up 8.3% year-over-year, keeping bearish pressure on prices. The EIA’s recent upward revision of 2025 production estimates — now at 107.67 Bcf/d — reinforces the longer-term oversupply theme.
At the same time, LNG exports remain strong at 18.0 Bcf/d, and domestic demand hit 114.7 Bcf/d on Monday, up 30% year-over-year, showing underlying strength in usage. Electricity output is also supportive, with generation up 2.11% year-over-year for the week ending November 29.
However, inventories remain adequate. The latest EIA storage report showed a smaller-than-expected withdrawal of 12 Bcf, well below the five-year average draw of 43 Bcf. U.S. stocks are still 5.1% above the seasonal average, muting any immediate supply concerns. European storage remains ample as well, further dampening global demand signals.
