Is the Cold Snap Enough to Sustain the Rally?

Prices climbed 1.36% on Thursday, recovering from early session losses to hit their highest level in nearly three years. The driver? Fresh forecasts from Atmospheric G2 showing sub-normal temperatures across the eastern U.S. from December 9–13. That’s pushing expectations for stronger heating demand, a key seasonal tailwind. Traders have seen this pattern before — winter risk premium creeping in fast, and positioning tends to follow.

Still, not all the data was bullish. The EIA reported a storage draw of just 12 bcf for the week ending November 28, well below expectations for an 18 bcf drop. The five-year average draw for this week is 43 bcf. That’s a miss, and it shows inventories remain comfortable — now 5.1% above the five-year average, even if they’re slightly below last year’s levels. Bottom line: storage isn’t screaming scarcity.

Strong Demand, But Supply Isn’t Backing Off

On the production front, dry gas output hit 111.5 bcf/day on Thursday, up more than 6% from a year ago. And despite the cold snap, supply hasn’t flinched. In fact, active rigs climbed to 130 last week, a 2.25-year high. That supply confidence might cap upside in the near term unless weather turns severe.

Demand is holding up. Thursday’s lower-48 consumption hit 118.1 bcf/day — a 12% jump year-over-year. Meanwhile, LNG flows ticked down slightly to 17.7 bcf/day, but that’s still a historically strong level. Power burn is also supportive: U.S. electricity output rose 2.1% y/y last week, with a 3% gain over the trailing 12 months. Traders are watching for whether this demand can keep pace with elevated production — or if another storage miss cools the rally.

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