Cold Front Coming: U.S. Weather Turns Cold, Driving Up Natural Gas Prices

Natural gas futures (December Delivery) soared 2.48% on Friday, reaching a one-week high. What’s behind this? Meteorological agencies forecast a widespread drop in temperatures across the U.S. by the end of November and early December, which means heating demand will spike.

Bullish signals from the supply side

Last week, the EIA report showed a dramatic drop in natural gas inventories by 1.4 billion cubic feet (bcf), surpassing the expected 1.2 bcf and significantly below the five-year average (an increase of +1.2 bcf). It seems that inventories are being consumed rapidly.

But the pressure on the production side is immense

The EIA just raised its forecast for U.S. natural gas production in 2025 by 1%, reaching 10.767 trillion cubic feet per day. U.S. production is now close to historical highs, and the number of active rigs has reached a two-year high. On Friday, the dry gas production in the lower 48 states was 111.1 bcf/day, an increase of 7.9% year-on-year.

Weak demand is a hidden concern

Interestingly, the natural gas demand on the same day actually decreased: the demand in the lower 48 states was only 82.8 bcf/day, down 9.2% year-on-year. LNG export flow also slightly decreased to 17.7 bcf/day.

European Inventory Tightness

Currently, Europe's natural gas inventory is only 81% full, while the 5-year average for the same period is 90%. The tight supply here may drive up global gas prices.

Overall Logic: Cold air is coming → Heating demand increases → Inventory is decreasing → But production hits a new high → Mid-term supply is sufficient, but short-term prices may fluctuate due to seasonal changes.