Natural Gas Update December 24,2025

Overview

Natural Gas-- February NG is down 7.6 cents at $3.820
NG futures are lower now after rallying overnight. Prices are now well off the overnight highs as the market gives back some of the strong rally seen yesterday. 

NG's rally Tuesday was the strongest one day move seen in 3 years, as colder weather forecasts collided with thinning holiday liquidity, as per NGI reporting. The NOAA 6-10 day temp outlook shows a dramatic shift in below-normal temps encroaching on the eastern third of the L48, concentrated in large coastal cities in New England and the Northeast. As per one colleague's comment : "winter is not over yet." Celsius Energy said that although near term demand is bearish with daily storage injections of 5 BCF/d through this weekend, next week will see daily storage withdrawals in excess of 30 BCF/d, which is double the 5 year average, they add.

Record LNG demand was cited as another element boosting prices Tuesday. Average deliveries to the eight major US LNG plants rose to 18.5 BCF/d so far in December, surpassing November’s record of 18.2 BCF/d. Tuesday's LNG feedgas volume was seen at 18.6 BCF/d, up from an average of 18.1 BCF/d seen last week. (Hellenic Shipping News) 

On Tuesday, NG demand was forecast for this week at 127.9 BCF/d and next week at 136.0 BCF/d as per LSEG. These forecasts were up 3.1 BCF/d from the prior day's estimates.

Yet, NG production in the U.S. continues to set a record. December gas production so far has averaged 111.1 BCF/d, up from November's record of 109.6 BCF/d, as per LSEG data. 

The Baker Hughes gas rig count issued Tuesday showed an unchanged amount.

The pattern seen the past 3 sessions in NG futures settlements continued Tuesday with the forward curve strengthening considerably. January NG futures settled up 44.3 cents, February up 32.5 cents, March up 22.2 cents.

Bloomberg reported the wholesale price of LNG in China had dropped to $10.72 this week, which was the lowest price seen since the middle of 2021. Traders have attributed the price drop to a combination of factors, including high levels of gas in storage and an abundance of supply. What’s more, the weather forecast suggests milder than expected temperatures in parts of the country, and industrial demand has remained subdued, according to S&P Global.

The following comments were heard yesterday with regard to NG futures:  a move over $4.20 for NG would be (1) the gateway to a new price regime.  (2) above the $4.20 level, then the market could go much higher from here. One colleague suggested that Tuesday's sharp up move was a "blowout day".

January spot NG futures settled Tuesday at $4.408, which was nearly $1.00 above the next day Henry Hub cash price seen mid-morning. The low next day cash price is possibly a function of the weak demand that comes with the Christmas holiday low industrial demand period and not necessarily reflective of a trend. We are wondering though how much further the spot futures rally can go given that the next day cash price was $1 below the spot futures on Tuesday-with the spot January futures set to expire next Monday-and thus the notion of convergence between cash and futures comes into play.

Technically February NG has positive momentum. Support comes in at 3.734 and then at 3.617-3.618. Resistance lies at 3.920-3.925 and then at the overnight high at 3.974-3.979.

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