Just noticed natural gas has been getting hit pretty hard lately. Prices dropped again this week as forecasts are calling for above-normal temps across the eastern US, which is obviously crushing heating demand right now. That's pretty typical for this time of year but the scale of the pullback is notable.

Looking at the supply side, production is actually ramping up significantly. Lower-48 dry gas output hit 114 bcf/day earlier this week, up almost 9% year-over-year. Meanwhile demand fell to 85 bcf/day, down over 31% from last year. The EIA just raised their 2026 production forecast too, which isn't helping sentiment. Active gas rigs hit a 2.5-year high recently, so we're likely to see even more supply hitting the market.

The interesting part is storage. With warmer weather, storage levels should rebuild pretty easily now. Storage in Europe is only at 33% capacity versus the normal 49% for this time of year, but US storage dynamics are different. Still, the overall picture for natural gas demand looks pretty soft in the near term.

Worth noting though - back in January when that Arctic system hit, we saw a completely different story. Prices spiked to 3-year highs because about 50 bcf of production froze offline. Electricity demand actually surged 15% year-over-year that week. So the market can flip quickly when weather gets extreme, but right now with mild conditions expected through late February and beyond, natural gas demand pressures are minimal. The consensus is inventories will draw down another 149 bcf this week, but that's still below the 5-year average draw, suggesting supplies are loosening up.