Author: Timothy St. John

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. 

A drop in demand for natural gas and warm weather outlooks are driving prices low this week, and U.S. natural gas futures fell to $3.87 MMBtu on Tuesday.

Gas prices in the United States fell for the third session in a row, and this is now the lowest these prices have been since October. The bearish rates have been attributed to warm weather forecasts as well as declining demand.

The coming week could be warmer as well than early December was, and that weather outlook has caused investors to have a bearish sentiment on natural gas this week. Notable losses may hit the market over the next few days, erasing months of gains.

The Cold Snap Relief the Industry Needs

Lower gas prices and warm weather could be chased away quickly if the currently cold weather affecting Canada were to suddenly move south. Meteorologists say that this might happen at any time, and if it does, we would expect gas prices to shoot up in response.

Currently dropping rates and warming weather have created a bearish market, but that should not last. Gas has been withdrawn from reserves at a higher rate than expected, according to the latest EIA report. That should balance out some of the diminishing demand, but we do expect high supply levels to remain a thorn in the side of the industry through the rest of the year.

During the lowest months of the year for gas futures, production plants were sending out little gas and drawing in plenty, creating an oversupply issue that stymied market growth. The problem was exacerbated as peace settled on Ukraine and the Middle East earlier this year and gas reserves in those areas no longer came under fire.

The weather forecast for early 2026 suggests that the winter will be colder than normal in many parts of the United States. Frigid weather patterns will be driven by a feeble polar vortex as well as the shifting of the jet stream. These changes should create sudden cold areas as well as lengthy arctic conditions in some areas of the country.

Forecasters say this winter could be as cold as the historically frigid winter season of 2013-2014. If the forecasts hold true, then we may not see much more of this warm weather, and temperatures should drop rapidly soon, leading to greater gas demand and spiking gas futures.