Analyst Looks at Natural Gas Price Moves

In a natural gas focused EBW Analytics Group report sent to Rigzone by the EBW team on Friday, Eli Rubin, an energy analyst at the company, warned that late December heating demand “continues to disintegrate”.

“Yesterday’s 177 billion cubic foot withdrawal did little to stop the massive sell-off in natural gas, with the NYMEX front-month plummeting to close at a seven-week low of $4.231 [per million British thermal units (MMBtu)],” Rubin said in the report.

“Although a frigid early December may erode storage surpluses over the next two EIA [U.S. Energy Information Administration] reports, the market is focused on eroding late-December heating demand,” he added.

In the report, Rubin noted that the week leading into Christmas “shed another seven gHDDs over the past 24 hours, with exceptionally mild weather anticipated across the country in the back half of the month”.

“Daily demand may still surge into Sunday’s peak – but is expected to plunge 26 billion cubic feet per day [Bcfpd] into mid-next week, likely delivering a blow to physical gas prices,” he added.

Rubin went on to warn in the report that technicals also appear weak, “with prices falling below the 20-day, 50-day, 100-day and 200-day moving averages”.

“Shorts may take profits off the table ahead of the weekend, and medium to long term fundamentals appear more supportive than recent price action suggests, but momentum is bearish and this week’s 133 billion cubic foot loss of weather-driven demand will leave an enduring mark on NYMEX futures,” he said.

This EBW report highlighted that the January natural gas contract closed at $4.231 per MMBtu on Thursday. It outlined that this was down 36.4 cents, or 7.9 percent, from Wednesday’s close.

In an EBW report sent to Rigzone by the EBW team on December 10, Rubin highlighted that a “weather collapse plunge[d]… natural gas into freefall”.

“The January natural gas contract plummeted to $4.455 early this morning – a $1.041 implosion from Friday’s intraday high – as late December continues to hemorrhage demand,” Rubin said in that report.

“Since Friday, Week 3 has shed 42 gHDDs, with initial forecasts for a cold end to 2025 flipping to a blowtorch solution for most of the Lower 48,” he added.

“Week over week demand may shed 9.5 Bcfpd into Week 3, with a counter-seasonal warmup negating last week’s supply concerns,” he continued.

“Still, Henry Hub spot prices cleared at $4.76 per MMBtu with daily heating demand to jump 15.6 Bcfpd into the weekend. Weekly average LNG is at a record high, production readings are declining, and the storage surplus vs. five-year average may disappear into early 2026,” he noted.

In this report, Rubin went on to state that, “although it is difficult to ascertain when weather models will stop shedding demand and selling pressure will cease, the medium-term fundamental outlook is sounder than early-week price action suggests”.

Rubin also warned that “weather forecast evolution will continue to play a dominant role in the price trajectory for NYMEX gas futures”.

This EBW report highlighted that the January natural gas contract closed at $4.574 per MMBtu on Tuesday. The report outlined that this was down 33.8 cents, 6.9 percent, from Monday’s close.

In another EBW report sent to Rigzone on December 11, Rubin noted that the “Week 3 weather-driven demand collapse” was continuing.

“The NYMEX front-month staged a half-hearted 2.1 cent bounce yesterday – with the lack of a more sizable relief rally relative to the 71.5 cent early-week collapse a cautionary signal,” Rubin said in that report.

“The ongoing Week 3 weather collapse remains a bearish weight on the near-term outlook,” he added.

In this report, Rubin said “consensus expectations” for that day’s EIA storage report “span 165-174 billion cubic feet”.

“The first sizable storage pull of the year often includes linepack to bias withdrawals higher-and pipeline flow-derived draws also hint at risks of a possible bullish surprise,” he added.

Rubin highlighted in this report that “LNG feedgas figures have ticked lower” but added that the “overwhelming catalyst remains the 116-billion cubic foot collapse in demand since Friday”.

“Heating demand may surge 16 Bcfpd into the coming weekend, only to collapse 25 Bcfpd into the middle of next week,” he warned.

“Although medium-term fundamentals appear supportive, if late-December weather does not stabilize, further near-term downside cannot be ruled out,” he went on to note.

In this report, EBW highlighted that the January natural gas contract closed at $4.595 per MMBtu on Wednesday. The report outlined that this figure was up 2.1 cents, or 0.5 percent, from Tuesday’s close.

In its latest weekly natural gas storage report, which was released on December 11 and included data for the week ending December 5, the EIA stated that working gas in storage was 3,746 Bcf as of Friday, according to its estimates.

“This represents a net decrease of 177 billion cubic feet from the previous week,” the EIA said in this report.

“Stocks were 28 billion cubic feet less than last year at this time and 103 billion cubic feet above the five-year average of 3,643 billion cubic feet. At 3,746 billion cubic feet, total working gas is within the five-year historical range,” they added.

To contact the author, email andreas.exarheas@rigzone.com