Natural Gas Ends Rebound Quickly and Falls to Seven-Week Low
Natural gas futures int eh United States are lower than they have been in weeks after warm weather forecasts and lessening demand.
Quick overview
- U.S. natural gas futures rose 3% but fell again to a seven-week low of $3.9/MMBtu due to warm weather forecasts.
- Brent crude oil prices increased slightly, while WTI crude oil futures dropped, reflecting a global trend of decreasing oil prices.
- U.S. natural gas inventories are 0.9% higher than the five-year average, with recent withdrawals slightly below expectations.
- The U.S. is expected to remain the top natural gas producer by 2026, bolstered by new export facilities.
On Thursday, U.S. natural gas futures rose 3% from the previous day’s dip but then swiftly fell again to hit their lowest point in seven weeks at $3.9/MMBtu.
The natural gas market did not expect very high prices this week with the warm weather forecast, but a small reprieve was granted on Thursday as prices rose. However, with rising temperatures expected through Christmas, the prices dropped once more on expectations of falling demand.
Brent crude oil is up marginally by 0.56% to $60.13, and WTI crude oil futures are at $55.8 per barrel, a drop from the previous day. Prices across the globe are dropping now, with the United States and China seeing about a 20% decrease in oil prices for the year so far.
Lower Inventory Withdrawals Than Expected
The latest report from the EIA (Environmental Impact Assessment) showed that inventories for the United States are around 0.9% higher than the average for the past five years. That is an improvement over where they were earlier in the year when there was a substantial inventory surplus.
Withdrawals were reported for the week ending on December 12th, showing that 167 bcf was taken from storage. That number was just below expectations but in line with a year of slow withdrawal and hefty injections. The EIA reported deliveries to the eight major United States LNG facilities for export, totaling 18.6 Bcf/d.
Natural gas’ short-lived rebound is on par with this warmer than normal winter period. Freezing temperatures were reported last weekend in many parts of the United States, but the cold fronts have been pushed back by broad warm weather patterns that are expected to last through Christmas. With higher than normal inventories and a weak demand at the moment in the U.S. for natural gas, prices should remain low for the next few days.
For 2026, the global market should expect the United States to remain as the top producer for natural gas thanks to increased export capacity. The U.S. boasts two new facilities for export- the Golden Pass LNG and the Plaquemines LNG, both of which are planning to increase production in the coming year.
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