- US natural gas futures plunged as much as 5.4% on Monday to the lowest since April, after weekend forecasts shifted significantly warmer and pointed to lower demand in the early weeks of the heating season. The November contract was down 9 cents, or 3.4%, at $2.550 per million British thermal units as of 9:45 a.m. in New York.
- Front-month futures are now down more than 20% from two weeks earlier, mostly due to repeated shifts toward warmer forecasts. Above-average temperatures are expected across the eastern two-thirds of the US through Nov. 9, with the weekend’s demand drop concentrated in the Upper Midwest, according to EBW Analytics Group’s Eli Rubin.
- Hedge funds last week built the largest short position in data going back to 2013, a bet that could grow as traders become more convinced a Super El Niño will bring a very mild winter. BOK Financial’s Dennis Kissler said to expect a “sell the rallies” trade until the weather changes.
- The slide came on the same day EQT agreed to buy Range Resources in a roughly $12.8 billion all-stock deal that creates the largest US gas producer, a long-term bet on demand from data centers and LNG exports even as near-term prices weaken.
What Happened?
Natural gas prices tumbled Monday as forecasters shifted toward warmer weather, cutting expected demand for heating and power-plant fuel. The front-month contract dropped as much as 5.4%, while the December Henry Hub contract fell as much as 3.9%. Lower trading volumes ahead of the November contract’s expiry on Wednesday may be amplifying the decline. Traders increasingly expect a Super El Niño pattern to produce mild weather this winter, when gas demand is usually highest.
Why It Matters?
Winter is the most important season for gas demand, so a warm start can weigh heavily on prices and producer revenue. The record hedge fund short position shows how strongly speculators are leaning into the mild-winter view, which could amplify moves if forecasts flip colder. The price slump contrasts with the long-term optimism behind EQT’s purchase of Range, which rests on growing demand from AI data centers and LNG. For producers, the gap between weak near-term prices and strong long-term demand expectations is a key tension.
What’s Next?
Weather forecasts remain the main driver, with warmth expected in the eastern two-thirds of the US through Nov. 9. The November contract expires Wednesday, which could keep trading volatile as positions roll to December. Any shift to colder forecasts could force hedge funds to cover their record short positions and spark a sharp rebound. Until then, traders such as BOK Financial’s Kissler expect rallies to be sold.
