It is time to rotate into gassers
At the time of this post the NYMEX strip or HH natural gas futures is up.
NOV25 is at $3.205 + over 6%
DEC25 is at $3.883 < Will be the front month contract next week
JAN is at $4.184
Big move up due to short covering. Supply/Demand fundamentals also supporting Ngas.
Trading Economics:
US natural gas futures (NOV25) climbed nearly 5% to above $3.16/MMBtu on Monday, rebounding after two weeks of losses as output declined and exports remained strong. < Now up more than 7%.
> Data from LSEG showed production in the Lower 48 states averaged 106.6 billion cubic feet per day (bcfd) so far in October, down from 107.4 bcfd in September and a record 108 bcfd in August.
> At the same time, gas flows to US LNG export terminals rose to 16.4 bcfd, up from 15.7 bcfd last month and close to record highs, signaling strong export demand. < In Q1 2026 LNG export capacity from US facilities will be close to 20 Bcfpd.
> However, earlier record output has kept storage levels around 4% above the five-year average, providing a buffer against potential supply shocks. < Just normal winter weather in December and increasing LNG exports will wipe out the storage surplus to the 5-year average by the end of December. Comparing storage levels to the previous 5-year average is misleading. Demand for U.S. natural gas is MUCH HIGHER than it was five years ago.
> Weather forecasts remain warmer than normal through early November, which should limit heating demand more than it boosts air-conditioning use, likely keeping overall gas consumption subdued.
Go to this website https://www.celsiusenergy.net/ to see how the weekly natural gas storage reports should to get more bullish as we move into November.
If the CelsiusEnergy's forecasts prove to be accurate, gas in storage should be 156 Bcf above the 5-year average at the end of October.
Starting in November the surplus will begin to decline. In December 2024 the draws from storage for the four weeks ending December 27th were 524 Bcf, which was 102 Bcf larger than the 5-year average. There was only one week in December 2024 that was colder than normal in the eastern U.S.
With just normal winter weather during November & December this year, the surplus to the 5-year average should be gone by year-end, primarily because of much larger LNG exports. If so, Q1 2026 will be a very good quarter for all of our "Gassers".
Dan Steffens
Energy Prospectus Group |
