# Natural Gas Takes a Hit: Weather and Supply Pile-up

Natural gas futures (Dec contract) dropped 4.95% on Monday, with December Nymex closing down 0.226. The selloff was fueled by two major headwinds:

**Supply Side Crushing Prices:**
- US nat-gas production hit near-record levels at 110.0 bcf/day, up 7.1% year-over-year
- EIA bumped 2025 production forecast to 107.67 bcf/day (up 1.0%)
- Active drilling rigs jumped to 2-year highs, signaling more supply incoming
- Inventory surge: Last week's EIA report showed +45 bcf build, beating consensus of +34 bcf
- Current inventories 4.5% above 5-year seasonal average—plenty in the tank

**Demand Looking Soft:**
- Lower-48 gas demand fell to 84.7 bcf/day (-5.5% y/y)
- Warmer weather forecast (Nov 22-26) reducing heating needs across eastern US
- LNG export flows at 17.6 bcf/day, slightly down week-over-week

**One Bright Spot:** US electricity output rose 0.12% y/y in the week ending Nov 8, with 52-week output up 2.84%, but it wasn't enough to offset the bearish fundamentals.

**Bottom Line:** With production running hot, inventories ample, and demand cooling alongside the weather, nat-gas faces serious headwinds. European storage at 82% (vs. 91% seasonal avg) shows weakness globally too.