US natural gas prices tumbled to a six-month low on Tuesday, as forecasts for milder-than-usual early November weather reduced expectations for heating demand. Front-month November futures slid 4% to $2.526 per million British thermal units (mmBtu), extending a steep pullback that has erased much of the summer's gains.
The drop comes as traders were already positioned for weakness. Data from the Commodity Futures Trading Commission (CFTC) shows speculators have built their biggest net short position since February 2024. That means many traders are betting prices will fall further, which can weigh on the market but also sets up the potential for sharp reversals if the outlook changes.
Supply steady, demand soft
Supply has been relatively stable. Lower 48 dry gas output has hovered a little above 110 billion cubic feet per day in October, according to the brief. Meanwhile, flows of gas into US liquefied natural gas (LNG) export plants have been slightly below their spring record. That combination of steady supply and softer demand is flattening the forward curve.
The next 12 months of contracts are trading near multi-year lows, and the March-over-April 2027 spread—often called the “widow-maker” because of its history of violent swings—has shrunk to roughly 6 cents per mmBtu. That is unusually small for the tail end of winter, when March typically trades at a premium to April because of lingering heating demand.
“The record-thin March-April premium says traders see little risk of late-winter scarcity,” said one market analyst. “But that also leaves little cushion if forecasts flip colder.”
What it means for investors
For everyday investors, the key takeaway is that natural gas prices are highly sensitive to weather forecasts. A mild winter can quickly reduce demand for heating, pushing prices down. But the current positioning also creates the potential for sharp moves in the opposite direction.
With speculators holding their most crowded net short position since February 2024, the market's “risk buffer” is small. If weather models suddenly turn colder, shorts may need to buy back March contracts quickly, which could widen the March-April spread in a hurry. The result can be bigger, faster price swings in Henry Hub—the US benchmark—and especially in the March-April calendar spread, even if US storage stays close to normal.
For investors with exposure to natural gas through exchange-traded funds (ETFs) or energy stocks, this means volatility is likely to remain elevated. It's worth remembering that natural gas prices are notoriously difficult to predict, and weather forecasts can change rapidly.
Related: EQT's $50B Range deal would create a US natural gas giant, highlighting consolidation in the sector. Also, soybeans slid to a two-month low as a record US harvest flooded the market, showing how commodity prices can be affected by supply and demand dynamics.
Investors should also keep an eye on broader market trends, such as stock futures rising ahead of the Fed decision and big tech earnings, which can influence risk appetite and commodity prices.
Ultimately, the current low prices reflect a market that sees ample supply and mild weather ahead. But the crowded speculative positioning means that any surprise in the forecast could trigger outsized moves. As always, it's wise to consider your own risk tolerance and investment horizon when dealing with volatile commodities.
