Forecaster Atmospheric G2 reinforced that view Friday, noting the latest 10-15 day outlooks have turned even warmer for much of the U.S., cutting into heating demand just as winter should be ramping up. Traders know the drill here: until weather shifts convincingly colder, upside moves will likely be sold into.
Production Stays High, Demand Lags
Supply remains heavy. Dry gas output from the Lower 48 clocked in at 112.3 bcf/day on Friday — up nearly 9% year-over-year. Meanwhile, Lower 48 demand dipped 1% y/y, according to BloombergNEF, and LNG feedgas flows slipped 2.7% week-over-week. That’s not a bullish mix.
Adding to the weight, the EIA’s latest forecast raised 2025 U.S. production estimates slightly to 107.74 bcf/day, while rig counts remain just shy of multi-year highs. Baker Hughes reported 127 active gas rigs as of Friday — steady on the week but still near the highest count since 2021. Bottom line: production isn’t flinching.
Inventory Still Comfortable, Despite Bearish Draw
The latest EIA storage report showed a 167 bcf draw for the week ended December 12 — slightly smaller than the consensus call for 176 bcf. While that’s above the 5-year average for this time of year, inventories are still 0.9% above the 5-year norm. That’s giving sellers cover, especially with European storage still at a comfortable 68% full.
Even electricity demand — a potential bright spot — hasn’t moved the needle much. While U.S. generation rose 2.3% y/y in early December, it’s not enough to offset weak residential heating demand.
Outlook: Bearish Bias Holds Unless Weather Shifts
Unless the weather picture flips colder — and fast — rallies are likely to stall below technical resistance at $4.218 and the 50-day moving average near $4.450. With sellers ready to fade strength, and fundamental pressure from strong output and lukewarm demand, the path of least resistance remains lower.
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