Natural Gas News: Bearish Forecast as Warm Weather and Output Surge Cap Futures

Natural Gas Prices Dip as Mild Weather and Higher Production Weigh on Market

December natural gas futures fell on Friday, pressured by forecasts for unseasonably warm weather across much of the U.S. and expectations of increased production. The contract settled at $4.313, down $0.042 or -0.96%, as traders weighed demand concerns against neutral storage data and a modest uptick in electricity consumption.

Will Warmer Weather Undercut Near-Term Heating Demand?

Weather models from G2 are pointing to above-normal temperatures for the western two-thirds of the U.S. through November 21. This could lead to weaker heating demand and adds downside pressure to prices already struggling to hold recent gains. The lack of cold weather reduces the urgency for storage drawdowns, keeping a lid on bullish momentum despite seasonal expectations.

Is Rising U.S. Gas Production Creating a Supply Overhang?

Production growth continues to be a key headwind. U.S. (lower-48) dry gas output was estimated at 110.0 bcf/day on Friday, up 8.1% from a year ago. Baker Hughes reported an increase in active U.S. natural gas rigs, pushing the count to a 2.25-year high. The EIA recently raised its 2025 production forecast to 107.14 bcf/day, up 0.5% from the previous estimate, reinforcing the supply-heavy outlook.

Did the Latest Storage and Demand Data Offer Relief for Bulls?

Thursday’s EIA report did little to shift sentiment. The +33 bcf injection matched expectations but was below the five-year average build of +42 bcf, offering mild support. Still, inventories remain ample—up 0.4% year-over-year and 4.3% above the five-year seasonal average. Meanwhile, gas demand across the lower-48 dropped 2.7% year-over-year to 77.0 bcf/day, while LNG export flows edged down 0.8% week-over-week to 17.3 bcf/day, according to BNEF.

Are There Any Signs of Strength in Electricity Demand?

Electricity usage showed modest strength. Edison Electric Institute data revealed U.S. power output rose slightly by 0.05% year-over-year for the week ending November 1 and is up nearly 3% over the past year. While helpful, this uptick is unlikely to offset the bearish weight from strong supply and softening seasonal demand.

Short-Term Outlook: Bearish Bias Prevails

Despite holding above Thursday’s low of $4.192, the market’s failure to overcome resistance at the 200-day moving average near $4.454 capped buying interest.

With prices closing below the 50% retracement level at $4.336, the near-term tone remains bearish. Stronger production, subdued weather-driven demand, and ample storage suggest additional downside is possible, especially if support near $4.192 gives way early next week.

More Information in our Economic Calendar.