The bearish case writes itself right now. Lower-48 production hit a record 112.2 bcf/day on Monday — up 8.3% year-over-year — and there’s no sign of a slowdown. Rig counts are holding near two-year highs at 127, and the EIA recently bumped its 2025 production forecast to 107.67 bcf/day. That’s a lot of gas looking for a home.
Demand isn’t keeping pace. Lower-48 consumption came in at 83.1 bcf/day Monday, up nearly 5% year-over-year but not enough to absorb the flood of supply. LNG exports are steady at 17.7 bcf/day, and electricity demand is running hot — up over 5% in the latest weekly data — but production keeps setting records.
Weather Models Keep Traders Guessing
The forecast is doing nobody any favors. Near-term demand looks light as above-normal temperatures blanket most of the country — highs in the 40s-60s up north, 50s-80s across the South. A cold shot arrives mid-week, pushing into the Rockies and Northern Plains with lows in the single digits and teens, then spreading east through the weekend. That should boost heating demand heading into December.
But here’s the problem: models are showing a milder setup for December 7-11 as cold air retreats toward Canada. Weekend data trended colder for the first ten days, and prices actually rallied overnight Sunday on those revisions — only to sell off when traders focused on the warmer second-week outlook. December contract expiration over the next two sessions is adding noise to the tape as well.
The Bull Case Isn’t Dead — Just Waiting
Storage offers some support. Last week’s EIA report showed a 14 bcf draw versus expectations for 12 bcf and the five-year average build of 12 bcf. Inventories sit just 3.8% above seasonal norms — hardly burdensome. European storage at 81% is running well below the 90% five-year average, which could pull more US LNG cargoes as winter deepens.
But for now, supply is winning the argument. Bulls need a sustained cold pattern — not a few chilly days followed by a warm-up — to flip sentiment. Until then, the path of least resistance points lower, and the 50-day at $4.352 looms as the next battleground.