• U.S. natural gas futures extended losses, with prices down about 5% to the lowest since April 2026, as rebounding production and forecasts for milder weather outweighed strong export demand.
  • The selloff follows a 6% drop on Friday, when November NYMEX futures settled at $2.64 per million British thermal units (MMBtu), marking a roughly 15% weekly decline.
  • Analysts point to a bearish near-term outlook, with storage levels above average and demand forecasts softening, even as LNG exports remain robust.

Bearish Fundamentals Weigh on Prices

U.S. natural gas futures tumbled on Monday, extending a sharp selloff driven by recovering supply and expectations of weaker heating demand. The front-month contract fell as much as 5% to its lowest level since April 2026, according to market data, following a 6% decline on Friday that left prices down nearly 15% for the week. The move underscores how quickly sentiment has shifted in a market where weather and production trends can rapidly alter the balance.

At the heart of the decline is a rebound in domestic output. Lower-48 production averaged about 113.3 billion cubic feet per day (Bcf/d) over the past week, recovering toward record monthly averages seen in August and September. While October’s month-to-date average remains lower at 111.6 Bcf/d, the recent uptick has added to supply at a time when demand is forecast to soften. “The market is reacting to a combination of higher production and weather models that have turned milder,” said a trader familiar with the matter, who asked not to be named because he is not authorized to speak publicly. “It’s a classic bearish setup.”

Weather forecasts point to mostly milder-than-normal conditions across the U.S. through early November, reducing expected heating demand. LSEG (LSEG.L) projected total demand, including exports, at 107.3 Bcf/d for the coming week, below its previous forecast. The shift in weather outlook has been pivotal, as heating season approaches but temperatures are not yet cold enough to draw down inventories significantly.

Export Demand Provides Some Support

Despite the bearish tone, LNG exports remain a bright spot. Gas deliveries to nine major U.S. liquefied natural gas export plants averaged 18.2 Bcf/d in October, up from 17.9 Bcf/d in September. However, that strength has not been enough to offset the domestic supply and weather pressures. “Exports are strong, but they’re not a game-changer at this point,” said an analyst at a energy consultancy. “The market is focused on the domestic balance, and right now that balance is loosening.”

Storage levels also bear watching. The latest inventory report showed 3,644 Bcf for the week ended October 16, about 1% above the five-year average, following a 77-Bcf injection. That injection was smaller than the five-year average increase of 87 Bcf, but inventories remain comfortable. The next federal storage report, due October 29, will be scrutinized for further signs of loosening.

Market Implications

The price decline comes as a relief for consumers and businesses that rely on natural gas for heating and electricity generation. Gas supplies about 40% of U.S. power generation, so lower prices can translate into reduced fuel costs. However, producers may face pressure if prices remain depressed. In a similar episode in 2024, low prices prompted producers to cut drilling budgets and curtail output. “If prices stay at these levels, we could see some producers pull back,” said Robert DiDona, president of Energy Ventures Analysis, in a recent interview. “But it’s too early to tell.”

The selloff also highlights the disconnect between U.S. and international gas prices. European benchmark gas was near $29/MMBtu and Asian LNG near $30/MMBtu on October 22, even as U.S. futures traded below $3. Limited export capacity prevents U.S. gas from fully reaching global markets, keeping domestic prices under pressure.

Looking ahead, the market will remain sensitive to weather forecasts and storage data. The Energy Information Administration’s October outlook projects Henry Hub spot prices averaging $3.48/MMBtu in 2026 and $3.16 in 2027, but near-term volatility is likely to persist. As one trader put it, “Mother Nature is still the biggest factor, and right now she’s not cooperating with the bulls.”

Correction: October 26, 2026 — An earlier version of this article misstated the five-year average storage injection. It is 87 Bcf, not 77 Bcf.