Natural Gas Market Update – December 22, 2025
- Tony Zelinski
- 3 days ago
- 2 min read
Natural gas futures hovered near $4/MMBtu on December 22, 2025, as mild weather forecasts and record production capped upside momentum despite strong LNG exports. The market enters the holiday week with tight trading ranges and a cautious tone.
📉 Price Action and Market Tone
Henry Hub futures traded around $4.11/MMBtu, up from last week’s close near $3.98, but well below early December highs near $5.26/MMBtu.
January contract rose 7.6 cents on Friday, but gains were erased Monday morning as traders digested warmer forecasts and high supply.
Liquidity is thinning ahead of the holidays, increasing volatility risk on forecast shifts.
🌡️ Weather and Demand Outlook
Forecasts call for warmer-than-normal conditions into early January, reducing heating demand expectations.
LSEG projections show U.S. gas demand (including exports) easing from 144.6 Bcf/d to 127.5 Bcf/d over the next two weeks—a sharp drop that explains recent price softness.
The next 15-day outlook is 1.8°F above average, further dampening bullish sentiment.
🏭 Supply and Storage
U.S. production remains near record levels, with Lower-48 output holding around 109.6–110 Bcf/d, matching November’s highs.
High supply continues to offset short-term cold spells, raising the bar for any sustained rally.
Storage levels remain above the five-year average, with modest withdrawals so far this season.
🌍 LNG and Export Dynamics
LNG exports remain strong, with U.S. terminals operating near capacity at ~19 Bcf/d.
Global pricing remains subdued, with Europe’s benchmark gas near the high-€20s/MWh.
Australia’s new gas reservation plan may shift global LNG flows, as exporters are required to reserve supply for domestic use.
🔍 Strategic Considerations
Short-term buyers: Consider layering in coverage near $4/MMBtu if forecasts shift colder; avoid chasing rallies unless weather risk intensifies.
Hedging posture: Maintain flexibility—weather remains the dominant driver, but LNG strength and policy shifts could surprise.
Basis markets: Watch Northeast basis for volatility; localized cold and pipeline constraints may drive regional spikes.
📌 Summary
Natural gas enters the final stretch of 2025 with a tug-of-war between robust supply and weather-driven demand. Mild forecasts and record output are keeping prices contained, but strong LNG exports and policy shifts abroad add complexity. Traders should stay nimble as thin holiday liquidity amplifies forecast-driven moves.
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