Natural Gas Update December 3,2025

Overview

Natural Gas--NG is up 9.7 cents at $4.937
The NG futures have recouped Tuesday's fall as the underlying cold weather demand and strong NG exports reestablish their support for the market. Tuesday's fall was seen due to uncertainty over weather forecasts with some possible warming having been suggested. Today's forecast has turned colder. Also, some profit taking has been cited for Tuesday's selloff.  The settlements Tuesday saw the January spot futures fall by 8.1 cents and the February futures fall by 3.7 cents, while the March through November 2026 contracts settled 0.3 to 2.3 cents higher. 

The latest weather forecast has added 9 HDD in the GS model and 16 HDD to the European model. NatGasWeather said Tuesday that bitterly cold air would impact much of the northern half of the United States the next couple of days. Overnight lows were forecast from below zero to the 20s across the Midwest, Ohio Valley and Northeast, including lows of 20s to 30s into North Texas and portions of the South. A reinforcing cold shot was expected to follow across these same regions Thursday–Monday, with weather models steadily trending colder.

NGI’s Southern Natural price index kicked off December by logging the biggest gain in South Louisiana, soaring 58.0 cents to average $5.280/MMBtu. The price jumped as the pipeline issued an Operational Flow Order (OFO), given that there was a supply/demand imbalance in customers' desires to move gas along the pipeline. The operational flow orders (OFO) have been put in place because of bitterly cold air sweeping deep into portions of the South, NGI adds. NGI adds that there were additional pipeline flow orders issued that affected deliveries in parts of Tennessee, as well as Pennsylvania.

NWE LNG prices have fallen sharply against US gas, driving the NWE–Henry Hub spread to a record low of $4.309/MMBtu Dec. 1, down from $11.48/MMBtu year-on-year, Platts said. Heavy US LNG supply has outweighed winter demand, pulling down European prices.  US LNG exports hit an all-time high of 11.14 million metric tons in November, with Europe absorbing roughly half. Traders warned that if TTF falls toward $8–$8.50/MMBtu, US LNG could move into loss-making territory, potentially triggering shut-ins similar to 2020. TTF today is trading Euro/Mwh 28.00, which equates to $9.58/MMBtu.  Market participants are increasingly concerned about further oversupply when the Golden Pass LNG terminal begins ramping up in early 2026. The TTF spot futures sank this week to their lowest value since April, 2024 on the back of seasonally mild temperatures in Europe and abundant supply.

Notable in the futures open interest on the CME is the large open interest increases in the October 2026 and December 2026 futures. There was a large trade executed in the spread, in which the December futures were bought and the October futures were sold at a differential of 60.5 cents.

In the LN/NG options market on Tuesday, the February March CSO and January puts traded actively. The February March CSO 35 cent/$1.00/$1.50 call butterfly traded at a cost of 10.3 cents to the buyer of the wings. Also, in the February March CSO calls, the 50 cent/$1.00/$1.50 butterfly traded 4.5 cents cost to the buyer of the wings. The February March 25 cent /15 cent put spread traded 3.1 cents. Also, in the February March CSO, the 45/35/25 cent put butterfly traded 1.6 cents cost to the buyer of the wings. The January $4.50/$4.25 put spread traded in a 1 by 2 ratio at a cost of 0.5 cents to the buyer of the higher strike put; there were .03 delta futures sales at $4.93 with the put trade.

Technically, the NG futures have another mean reversion setup from the settlement Tuesday over the DC chart's upper bollinger band. That band intersects today at 4.894. Resistance at 4.990-4.994 has been tested today with the high of 4.996. Above this resistance is seen at 5.061-5.063. Support comes in at yesterday's low at 4.805-4.806. DC chart based momentum is positive, but nearing overbought.

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