Natural Gas Bounces on Cold Weather Snap, But Production Surge Keeps Lid on Rally

Natural gas futures ticked higher on Tuesday as forecasters shifted their tune—cold air is rolling into the central and eastern US by late November, which should stoke heating demand. December Nymex contract closed +0.23%, recovering from a 1.5-week low.

Here’s the tug-of-war: The bullish case hinges on that weather flip. If temperatures dip as expected, gas furnaces across America will work overtime. US Lower-48 gas demand already sits at 87.3 bcf/day, up 14.1% year-over-year.

But production is crushing any upside. The EIA just bumped its 2025 US gas output forecast to 107.67 bcf/day—a +1% hike from September. Real-time production hit 108.7 bcf/day yesterday, nearly at record levels. More drilling rigs spinning up means more gas flowing, which keeps prices pinned.

Other headwinds: Last week’s EIA report showed inventories swelled by 45 bcf (vs. 34 bcf consensus), signaling supplies are ample. Storage sits +4.5% above the 5-year seasonal average. Meanwhile, US electricity output climbed 2.84% year-over-year over the past 52 weeks—solid underlying demand, but not enough to offset oversupply fears.

LNG export flows dipped 4.6% week-over-week to 17.1 bcf/day. Overseas, European gas storage hit 82% full, lagging the seasonal norm of 91%.

Bottom line: Weather support is real, but the structural supply glut is the bigger story. Unless cold sticks around or production stumbles, don’t expect nat-gas to rip higher.