As the weather warms up and inventories are sufficient, natural gas prices are being hammered. On Monday, December NYMEX natural gas closed down 4.95%, mainly due to the warmer forecast for parts of the Eastern U.S. from November 22-26, coupled with high levels of U.S. natural gas production and inventory.

Data Highlights:
- US dry gas production 110 bcf/day, up +7.1% year-on-year
- The EIA raised its 2025 production forecast to 107.67 bcf/day (+1.0%)
- The number of natural gas drilling rigs is 125, rebounding from a low of 94 in September, but the inventory growth rate exceeds expectations.
- The inventory is 4.5% higher than the 5-year average, the signal is clear - there is too much gas.

The only positive news is a slight increase in electricity demand (+0.12% y/y), but this is not enough to offset the pressure of overcapacity. On the European side, gas storage is only at 82%, far below the 5-year average of 91%. The entire energy market is digesting the reality of this supply surplus.