The Weather-Induced Pullback Is On

The near-term weather is the anchor dragging us down. The NatGasWeather outlook for the rest of the week through next weekend shows a quick cool blast in the Northeast fading fast. Most of the country is warming up, running highs from the 40s all the way to 80s down south. This means demand goes from “Moderate” to “Low” real quick. It’s a classic wait-and-see move as players sit on their hands until the next legitimate cold snap shows up.

Supply Is Too Stout to Ignore

The fundamental story keeping a lid on any rally is production. The Lower-48 states are pumping out a massive 110.0 bcf/day, which is a solid 7.1% jump year-over-year (y/y). The EIA sees no let-up, hiking its 2025 production forecast to 107.67 bcf/day. We also whiffed on last Friday’s storage report, posting an inventory build of +45 bcf—way over the +34 bcf whisper. This leaves stockpiles sitting +4.5% above the 5-year average. Too much supply on the screen, period.

LNG and Power Demand Keep the Floor Solid

It’s not all doom and gloom, though. The downside is limited by relentless export demand. LNG flows are still running hot at around 17.6 bcf/day. More importantly, power demand is creeping higher; last week saw Lower 48 power producers consume 6.1% more gas. We’ve got earnings coming up from Helmerich & Payne and Nvidia this week, which will give us a read on drilling activity and the future pull from massive data center construction. This structural demand boom is what keeps the longer-term bulls in the game.

The Crucial Flip to Withdrawal

The immediate focus is the EIA print for the week ended November 14. Analysts are calling for the first real drawdown of the season—a 17 Bcf withdrawal. That’s a massive shift from the 5-year average injection of 12 Bcf. This signals that heating demand, driven by a 24-week/week jump in Lower 48 heating degree days, is finally kicking in. This flip to a withdrawal could be the catalyst that triggers the bottom for this pullback.

Market Forecast: Bearish Near-Term, Watch for the Dip Buy