US natgas futures fall over 5% on above normal weather outlook, eye annual gain

ReutersDec 31, 2025 5:53 PM

By Noel John and Anmol Choubey

Dec 31 (Reuters) - U.S. natural gas futures dropped more than 5% on Wednesday, pressured by warmer forecasts next week and a federal report indicating a smaller-than-expected gas withdrawal, yet record gas flows to LNG export facilities in 2025 kept the market on track for its second straight yearly gain.

Front-month gas futures for February delivery NGc1 on the New York Mercantile Exchange traded 5.7% lower, at $3.745 per million British thermal units as of 12:41 PM ET. The contract was up over 3.2% so far this year.

"Given this weather and the drawdown number, there's really not a whole lot of room for the natural gas prices to go up," said Zhen Zhu, managing consultant at C.H. Guernsey and Company in Oklahoma City.

"Plus, the production's been fairly strong, especially for the second-half of 2025, even though there are some reports saying that for 2026 production is going to be probably kind of flat but overall still we are at a record production."

Meteorologists forecast above normal temperatures nationwide through January 14, with Heating Degree Days falling from 439 on Tuesday to 413 on Wednesday. HDDs measure energy demand to heat buildings.

Financial firm LSEG projected average gas demand in the lower 48 states, including exports, would edge lower from 137.8 bcfd this week to 134.5 bcfd next week, below its Tuesday's projection.

The U.S. Energy Information Administration (EIA) said energy firms pulled 38 billion cubic feet (bcf) of gas out of storage during the week ended December 26. EIA/GAS

That was below the 50-bcf withdrawal analysts forecast in a Reuters poll and compares with a decline of 112 bcf during the same week last year and an average withdrawal of 120 bcf over the past five years (2020-2024).

This month, the Energy Information Administration projected in its Short-Term Energy Outlook that dry gas production will rise to 109.1 bcfd in 2026, exceeding the record 103.6 bcfd in 2023. Analysts expect natural gas prices to be supported in 2026, owing to growing demand for electrification and gas-fired plants. NGAS/POLL

"Our view for 2026 and beyond is kind of two-fold," said Robert DiDona, president of Energy Ventures Analysis. "One is that we see healthy power generation coming from the gas-fired sector to support the electric demand growth, and two is we're about to hit the next wave of the LNG boom."

LSEG said average natural gas output in the lower 48 U.S. states climbed to 110.1 billion cubic feet per day in December, surpassing November's monthly record of 109.6 bcfd.

Average gas flows to the eight large U.S. LNG export facilities climbed to 18.5 billion cubic feet per day (bcfd) so far in December, exceeding November's record of 18.2 bcfd.

On a daily basis, LNG feedgas was set to reach an over three-week high of 19.1 bcfd on Wednesday driven primarily by increased flows to Plaquemines plants in Louisiana, which is at 4.3 bcfd, above the 7-day average of around 4 bcfd, as per LSEG data.

Elsewhere, Dutch and British wholesale gas prices were little changed as strong wind power output curbed demand from gas plants, but the benchmark front-month Dutch contract was poised to end 2025 around 40% lower than the start of the year. NG/EU

	Week ended Dec 26 Actual	Week ended Dec 19 Actual	Year ago Dec 26	Five-year average Dec 26
U.S. weekly natgas storage change (bcf):	-38	-166	-112	-120
U.S. total natgas in storage (bcf):	3,375	3,413	3,430	3,317
U.S. total storage versus 5-year average	1.6%	-0.7%


Global Gas Benchmark Futures ($ per mmBtu)	Current Day	Prior Day	This Month Last Year	Prior Year Average 2024	Five-Year Average (2019-2023)
Henry Hub NGc1	3.97	3.99	3.41	2.41	3.52
Title Transfer Facility (TTF) TRNLTTFMc1	9.80	9.52	13.83	10.95	15.47
Japan-Korea Marker (JKM) JKMc1	9.57	9.69	14.34	11.89	15.23


LSEG U.S. Global Forecast System (GFS) Heating, Cooling and Total Degree Days
Two-Week Total Forecast	Current Day	Prior Day	Prior Year	10-Year Norm	30-Year Norm
U.S. GFS Heating Degree Days (HDD)	413	439	418	384	396
U.S. GFS Cooling Degree Days (CDD)	6	4	0	3	3
U.S. GFS Total Degree Days (TDD)	419	443	418	387	399

LSEG U.S. Weekly GFS Supply and Demand Forecasts
	Prior Week	Current Week	Next Week	This Week Last Year	Five-Year (2020-2024) Average For Month
U.S. Supply (bcfd)
U.S. Lower 48 Dry Production	111.1	110.4	110.1	N/A	99.3
U.S. Imports from Canada	9.9	10.4	9.6	N/A	8.9
U.S. LNG Imports	0.0	0.0	0.0	N/A	0.1
Total U.S. Supply	121.0	120.8	119.6	N/A	108.3

U.S. Demand (bcfd)
U.S. Exports to Canada	4.2	4.2	4.2	N/A	3.3
U.S. Exports to Mexico	5.6	5.1	5.8	N/A	5.4
U.S. LNG Export Feedgas	18.1	18.8	18.7	N/A	12.8
U.S. Commercial	14.1	17.0	16.0	N/A	14.9
U.S. Residential	22.4	28.2	26.2	N/A	24.2
U.S. Power Plant	29.4	30.4	30.0	N/A	33.6
U.S. Industrial	24.7	25.5	25.3	N/A	25.2
U.S. Plant Fuel	5.5	5.5	5.4	N/A	5.7
U.S. Pipe Distribution	2.6	2.9	2.8	N/A	4.2
U.S. Vehicle Fuel	0.1	0.1	0.1	N/A	0.2
Total U.S. Consumption	98.9	109.7	105.9	N/A	108.0
Total U.S. Demand	126.8	137.8	134.5	N/A	129.5

N/A = Not Available

U.S. Northwest River Forecast Center (NWRFC) at The Dalles Dam (Fiscal year ending Sep 30)	2026 Current Day % of Normal Forecast	2026 Prior Day % of Normal Forecast	2025 % of Normal Actual	2024 % of Normal Actual	2023 % of Normal Actual
Apr-Sep	99	-	76	74	83
Jan-Jul	98	-	78	76	77
Oct-Sep	102	-	80	77	76

U.S. weekly power generation percent by fuel - EIA
	Week ended Jan 02	Week ended Dec 26	2024	2023	2022
Wind	16	15	11	10	11
Solar	4	4	5	4	3
Hydro	7	7	6	6	6
Other	1	1	1	2	2
Petroleum	0	0	0	0	0
Natural Gas	34	34	42	41	38
Coal	16	17	16	17	21
Nuclear	22	21	19	19	19

SNL U.S. Natural Gas Next-Day Prices ($ per mmBtu)
Hub	Current Day	Prior Day	This Month Last Year	Prior Year Average 2024	Five-Year Average (2019-2023)
Henry Hub NG-W-HH-SNL	4.40	4.35	3.02	2.19	3.49
Transco Z6 New York NG-CG-NY-SNL	4.55	7.19	3.31	1.98	3.29
PG&E Citygate NG-CG-PGE-SNL	3.02	2.83	3.42	3.04	5.47
Eastern Gas (old Dominion South) NG-PCN-APP-SNL	3.67	3.73	2.70	1.68	2.77
Chicago Citygate NG-CG-CH-SNL	3.75	3.94	2.82	2.00	3.41
Algonquin Citygate NG-CG-BS-SNL	16.75	16.25	8.16	2.88	4.27
SoCal Citygate NG-SCL-CGT-SNL	3.61	3.45	3.54	2.47	5.92
Waha Hub NG-WAH-WTX-SNL	0.72	0.21	2.28	0.77	2.91
AECO NG-ASH-ALB-SNL	2.56	2.61	1.26	0.96	2.28

ICE U.S. Power Next-Day Prices ($ per megawatt-hour)
Hub	Current Day	Prior Day	This Month Last Year	Prior Year Average 2024	Five-Year Average (2019-2023)
New England E-NEPLMHP-IDX	142.93	143	85.01	47.35	48.44
PJM West E-PJWHRTP-IX	56.21	62.89	43.03	41.98	45.33
Mid C W-MIDCP-IDX	31.13	28.01	42.33	63.89	61.73
Palo Verde W-PVP-IDX	28.33	26	32.02	39.50	62.42
SP-15 W-SP15-IDX	38.99	35.10	39.19	31.30	58.87

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