Natural Gas Market Update – December 3, 2025
- Tony Zelinski
- Dec 3, 2025
- 2 min read
Natural gas prices soared to their highest level in three years on December 3, 2025, fueled by forecasts of colder-than-normal weather, record production levels, and robust demand for LNG exports.
📈 Price Action
Henry Hub futures climbed to $4.87/MMBtu, up 0.62% from the prior day.
January contracts briefly traded above $5/MMBtu, marking the highest level since December 2022.
Prices have risen 12% in the past month and are up 60% year-over-year.
⚡ Fundamentals Snapshot
Production: U.S. natural gas output hit a record 109 Bcf/d, keeping storage levels healthy despite rising demand.
Storage: The EIA reported the first withdrawal of the season at 11 Bcf, signaling the start of winter drawdowns.
Consumption: Cold air across the Midwest and Northeast is driving strong heating demand, with daytime highs in the teens to 30s and overnight lows dipping below zero.
🌍 LNG and Export Dynamics
Exports: U.S. LNG shipments reached 10.7 million tons in November, a 40% increase year-over-year.
Capacity outlook: Current exports are near 19 Bcf/d, approaching existing capacity. Long-term projections suggest 28–33 Bcf/d by 2030.
Global impact: Sanctions on Russian gas and European demand continue to support U.S. LNG flows.
🔑 Risk Drivers
Weather: Sustained cold snaps could push futures higher; a warm spell may trigger sell-offs in January.
Storage prints: Larger-than-expected draws could reprice the curve.
Cash vs. futures spreads: Persistent cash strength may pull prompt contracts higher.
Pipeline projects: New capacity slated for late 2026–2027 could ease prices longer term.
🧭 Strategic Takeaways
Short-term buyers: Avoid locking in elevated winter premiums; consider index pricing for January volumes.
Hedging posture: Utilities like Decatur are securing bulk purchases at $2.93/MMBtu for Nov 2025–Mar 2026, ensuring rate stability.
Medium-term outlook: Prices are expected to peak near $5/MMBtu in January 2027, with seasonal lows around $3.50/MMBtu in May 2027
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