Natural Gas Slumps as US Output Hits Record High, Weather Forecast Mixed

Natural gas futures took a breather Monday, with December Nymex closing 0.68% down as conflicting signals battle for market attention.

The Bearish Pressure: Production Surge

The headline driver? US nat-gas production just hit a fresh record. Lower-48 output climbed to 112.2 bcf/day on Monday—up 8.3% year-over-year according to BNEF data. This supply glut is weighing heavily on prices. The EIA’s latest forecast doesn’t help either: they hiked their 2025 production estimate to 107.67 bcf/day, a 1% uptick from September’s call.

Active drilling rigs are also near 2-year highs, signaling more supply is coming down the pipeline.

Weather Throws a Curveball

Forecaster Atmospheric G2 painted a mixed picture for late November into early December: colder air expected across the eastern two-thirds of the US (bullish for heating demand), but warmer conditions in the Southeast and West offset that advantage.

The Bright Spots

Not all the news was gloomy:

• Last week’s EIA inventory report showed nat-gas storage fell 14 bcf—beating the consensus -12 bcf draw and signaling tighter-than-expected supplies
• US electricity output surged 5.33% year-over-year in the week ending November 15, supporting gas-fired generation demand
• Current inventories remain adequate at 3.8% above the 5-year seasonal average

What’s Next?

The real question: can record production keep tempering prices, or will a colder winter knock some supply offline? European storage at 81% full (vs. 90% seasonal average) suggests global supplies remain ample, which could cap any rallies.

Bottom line: oversupply dynamics are in control for now, but don’t sleep on winter weather wildcards.