FX.co ★ US Natural Gas Futures Drop, Set for Second Annual Gain

U.S. natural gas futures have declined to approximately $3.70 per million British thermal units, marking their lowest point since October 23. This drop stems from forecasts predicting warmer-than-average temperatures for the upcoming week. Heating Degree Days (HDDs), an indicator of energy demand for heating, are anticipated to decrease from 439 on Tuesday to 413 on Wednesday, suggesting a decline in short-term demand. According to LSEG, the projected average gas demand across the lower 48 states, inclusive of exports, is expected to slip from 137.8 billion cubic feet per day (bcfd) this week to 134.5 bcfd next week, which is lower than previous forecasts. In parallel, the Energy Information Administration (EIA) anticipates that dry gas production will increase to 109.1 bcfd by 2026, up from a record 103.6 bcfd in 2023. Despite today's setback, natural gas remains on course for an approximate 4% gain in 2025, marking the second consecutive year of growth. This is largely supported by record levels of LNG export flows. Looking forward, it is anticipated that the market will continue to be bolstered in 2026 by growing demand for electrification and gas-fired power generation.