The primary driver remains the weather—and it’s not helping. Models now show above-normal temperatures across most of the U.S. through year-end, especially in the West, Central, and South. That’s a sharp shift from the early-December cold that sent gas to $5.496 and briefly reignited winter rally hopes. But the warmup crushed heating load: Texas res/com demand dropped 9% as Houston jumped from 43°F to 61°F, and Florida saw an 8% decline as mild conditions stretched across the Southeast. Bottom line: the market’s not pricing in winter anymore.
Production Stays Strong While Demand Softens
Fundamentals outside of weather aren’t offering much support either. Lower-48 production is still hovering near record highs at 109.7 Bcf/d—matching November’s peak. That’s keeping supply flush, even as the latest EIA storage draw came in at 167 Bcf, slightly below expectations despite beating the five-year average.
Inventories are just 0.9% above average now, down from autumn’s surplus. The bigger issue: demand just isn’t keeping up. There’s some softening in drilling activity—gas rigs fell by two to 127—but that’s more of a 2026 story. Near-term, the market remains oversupplied.
LNG Demand Is Strong — But Bulls Still Can’t Catch a Bid
If there’s a bull case left, it’s LNG. Export volumes averaged 18.6 Bcf/d last week, hitting a fresh high and exceeding November’s record. Thirty-three cargoes left U.S. ports, showing strong international demand.
And there’s more coming: Venture Global’s Plaquemines facility and Cheniere’s new Corpus Christi unit are adding capacity, eventually bringing up to 3 Bcf/d of incremental demand. But both are still ramping, and near-term flows won’t meaningfully change the current oversupply narrative.
Is the Market Oversold — or Just Weak?