Natural Gas Update December 2, 2025

Overview

Natural Gas--NG is down 4.1 cents at $4.880
NG futures are lower now after  they had traded overnight to the best spot futures value since December 28, 2022.  A bullish narrative pushed prices higher, with one commentary noting: that traders have been responding to the strongest pre-winter demand since 2021. Additionally the record amount of LNG feed gas for export has boosted gas values of late. Also, gas production fell some Monday. Yet, today news shows Northeast week-ahead weather to be warmer than normal, as per Market News reporting.

On Monday, news was seen that projected that U.S. heating demand for the week ending Dec 6 was forecast to be 19 heating degree days (HDD) above the long-term normal, according to Bloomberg, citing the NOAA. Reuters added : " Meteorologists forecast temperatures across the country will remain mostly colder than normal through December 16."  On Monday, forecasts shifted colder across the eastern two-thirds of the US and warmer across the West for Dec. 6-10, as per weather forecasting group Atmospheric G2.

NGI had a headline yesterday that read: "  ""‘Exceptionally Volatile’ Trade Expected as Natural Gas Market Awaits Weather Clarity."  Volatility was very evident in the next day Henry Hub (HH) cash trading Monday morning. In a 20 minute period the cash price fell from $5.12 to $4.85. The cash futures differential had flipped to a premium of 26 cents ( favor of the cash) when the HH  traded $5.12. That premium fell to about 2 cents when the cash price retreated. The cash had traded at a discount to the spot futures of about 5.5 cents mid-week last week. Next day cash gas prices at the Henry Hub have fallen back today to trade at a 4 to 5 cent discount to the spot futures; HH traded $4.80 versus January NG futures printing $4.842-4.848.

On Monday, LSEG projected average gas demand in the Lower 48 states, including exports, would fall from 142.0 BCF/d this week to 139.7 BCF/d next week. These forecasts were up a total of 4.6 BCF/d from those seen Friday.  Lower 48 natural gas demand is estimated 0.297 BCF/d lower today at 114.6 BCF/d to remain near the highest since February seen yesterday, Bloomberg shows. The five-year seasonal average is around 91.1 BCF/d.

LSEG said average gas output in the Lower 48 states rose to a record 109.6 BCF/d in November. That is down 0.1 BCF/d from their average for November seen as of last Friday.  U.S. domestic natural gas production is estimated 0.132 BCF/d lower today at 112.72 BCF/d compared to a record high of 114.0 BCF/d on Nov. 30 and the 30-day average of 111.8 BCF/d.  (BNEF)

Average gas flows to the eight big LNG export plants operating in the U.S. rose to a record 18.2 BCF/d in November. That is up from the average November LNG volume seen last Wednesday of 18.1 BCF/d.

Celsius Energy analysis saw Monday's gas storage inventories drawing by over 25 BCF as wind generation slackened & colder temperatures settled into the Deep South & East. They further projected that the next 7 days would see strong withdrawals of 20 BCF/d or more.

There were notable large options trades and open interest increases seen Monday on the CME in the February/March one month Calendar Spread Options (CSO) and the June calls. The February March 35 cent call was bought against which both the 50 cent call and 25 cent put were sold for a cost to the 35 cent call buyer of 0.8 cents. Also in the February March CSO, the $1.50 call traded 13.5 cents. The $1.50 call in the February March CSO was also bought as a part of a butterfly with the 35 cent call having been bought against which twice as many $1.00 calls were sold for a total cost of 8.3 cents to the wing buyer. A very large amount of new open interest was seen in the June $5.25 and $6.25 calls. A trade occurred with the $5.25 call bought against selling of 1.5 as many of the $6.25 calls with a small (.o6) delta amount of June futures sold at $3.86.

Technically, again on Monday, the spot futures had a mean reversion set up, having settled over the DC chart upper bollinger band. That band lies at $4.830. Momentum basis the DC chart remains positive, although as we noted yesterday, the weekly continuation chart's momentum is overbought. Resistance at 4.990-4.994 was almost tested with today's high being 4.984. Support below comes in at 4.811-4.815 and then at yesterday's low at 4.754-4.758.

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Disclaimer

This article and its contents are provided for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.

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