The December Henry Hub contract settled higher for the fifth week, with prices remaining near recent highs above $4.50/MMbtu. Gains were mostly limited to the front of the curve, as Summer ’26 and Winter ‘26/’27 finished the week mostly flat. This week also marked the first reported net-withdrawal from storage in the EIA’s weekly inventory report.
Near-term prices continued to strengthen as the demand outlook for December looks strong. Currently, Lower-48 population-weighted temperatures are above the ten-year average, but a cooler pattern is expected to impact the US towards the end of November and heading into December. This should lead to increased gas demand and larger draws from storage. Outside of the next two weeks, temperatures may remain cooler than average. Commodity Weather Group currently forecasts the month of December to be materially colder than normal, potentially being the ninth coldest December of the past 25 years. While long-range weather forecasts often lack accuracy, anticipation of a potentially cooler December may be helping to support gas prices.
This week, the EIA reported a -14 Bcf withdrawal from storage, the first net-withdrawal of the Winter ‘25/’26 season. This resulted in the storage surplus to the five-year average shrinking to the lowest level since early summer, with inventories now 146 Bcf above average. We expect inventories to continue tightening to the five-year average this winter, assuming ten-year average weather, primarily driven by continued strength in LNG feedgas. Our modeling shows storage levels falling below the five-year average and ending winter about 130 Bcf below average. This should support gas prices in 2026.
Natural Gas Factors
Price Trend. (Bearish, Priced In) Gas prices have moved lower this summer, but over the past several weeks the prompt Henry Hub contract has traded in a range around the $3.00/MMbtu level.
Winter S&D. (Bullish, Surprise)
Storage Level. (Bearish, Priced In) The storage level is a bearish priced-in factor due to the high levels of gas in inventories relative to the five-year average. According to the latest EIA weekly natural gas inventory report, the surplus to the five-year average stands at 204 Bcf above the five-year average but 4 Bcf below last year.
Associated Gas Production.(Bearish, Priced In) Growth in associated gas production will be much slower than has beeen seen over the past few years, at least until the second half of 2026. Pipeline capacity out of the Permian Basin will begin to grow again next year, likely filling relatively quickly. These new Permian pipes should enter servicce around the same time as projects which will reroute gas around Houston, towards the border of Louisiana.
LNG Outages. (Bearish, Surprise) Feed-gas levels are at their near max capacity, and if there's any unplanned maintenance event or an outage, it may act as a surprise bearish factor for natural gas prices.
Slow Supply Response (Haynesville). (Bullish, Surprise) If production remains near where it is currently and does not grow into winter, this would be a bullish factor for gas prices. As production growth in the Permian and Northeast should be relatively constrained by pipeline capacity until the second half of 2026, the Haynesville will likely be the primary engine of production growth in the near-term. After being flat through most of 2025, Haynesville production and drilling activity has begun to increase this summer. Production is now up about 1.5 Bcf/d from the start of the year, but remains down from levels seen two years ago.
Hurricane Season. (Bearish, Surprise) With the majority of US LNG feedgas demand located along the US Gulf Coast, and offshore gas production having declined relative to total US production in recent years, hurricanes are now a bearish factor for gas prices. In addition to potential impacts to export plants, hurricanes pose a risk to power demand in the US Southeast. North Atlantic hurricane seaosn typically peaks around mid-September.
LNG Schedule. (Bullish, Mostly Priced In) With a significant amount of new LNG feedgas demand coming this year and the next few years, if these facilities startup sooner than anticipated it should be a bullish factor for gas prices. One example of this occuring is the recent startup of Plaquemines LNG, which saw feedgas levels reach more than 1 Bcf/d much sooner than anticipated.
Hedge Activity. (Bearish, Priced in) With prices for next winter and beyond continuing to trend higher, producers have been hedging into the strength of forward prices.
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