The December 2025 natural gas contract expired at $4.424, a $1.048 increase from the November settlement. Liquefied natural gas (LNG) exports continue to make an impact, with LNG feed gas deliveries setting new record highs, now exceeding 19 billion cubic feet per day (Bcf/d), as three new export facilities — Plaquemines, Corpus Christi Stage 3, and Golden Pass — progress through various stages of commissioning and ramp-up.

To help meet this growing demand, U.S. gas production has steadily increased: In the second half of November, production averaged 108 Bcf/d, with peak days surpassing 109 Bcf/d when maintenance activity was limited. This represents an increase of approximately 4.3 Bcf/d compared with the same period last year.

In early November, U.S. natural gas storage inventories peaked at 3.96 trillion cubic feet (Tcf). Following three consecutive weekly withdrawals, storage levels now stand at 3.923 Tcf, 18 Bcf below levels from a year ago but 191 Bcf above the 5-year average. (See Fig. 1-2.) With well-below-normal temperatures forecasted for early December and elevated next-day cash prices, we expect to see robust withdrawals and continued upward pressure on natural gas prices. Preliminary estimates suggest total December withdrawals could exceed 650 Bcf, leaving inventories near 3.3 Tcf entering January. While this aligns with historical norms, it follows a storage injection season that ended significantly above the 5-year average.

The forward curve (as shown in Fig. 1-3) highlights backwardation in the gas market, with near-term prices trading above deferred contracts. For example, the 2026 calendar strip is trading roughly 50 cents above the 2028 strip. Over the next several months, the market faces a complex balancing scenario, as it responds to winter weather impacts, the continued expansion of renewable generation, and producer sensitivity to current price levels. Determining the price needed to incentivize additional gas production will be critical as LNG export capacity expands and data center demand continues to grow.

Over the past month, the PJM Interconnection (PJM) power markets have experienced notable volatility, driven by shifting fundamentals, evolving policy discussions, and seasonal dynamics. Forward strips across the 12-, 24-, and 36-month horizons have fluctuated between gains and losses, reflecting the interplay of gas price movements, generator outages, and long-term load expectations.

Early in the period, we saw strong rallies in forward strip prices, particularly the 12-month and Winter 2026 contracts. These gains were attributed largely to lingering generator outages exceeding 60 gigawatts (GW) and colder weather forecasts that spurred short-covering activity. However, as November progressed, the trend briefly reversed. The 2026 12-month strip fell by roughly $1 per megawatt-hour (MWh), but then rebounded to 3-year highs. The 2027 and forward strip followed suit but have not hit the highs seen during the spring of 2024.

Weather continues to exert a strong influence on day-ahead locational marginal pricing (LMP) and forward pricing. While early forecasts hinted at colder-than-normal conditions — with December forecasted to be the coldest since 2010 — some possible warmer trends have introduced typical seasonal uncertainty. Outages, though declining from peak levels, remain stubbornly high — roughly 10 GW above historical norms for this time of year — sustaining elevated clearing prices in the day-ahead market.

Beyond near-term fundamentals, structural changes are reshaping PJM’s outlook. The region’s load forecast underwent a significant revision, dropping expected growth from 60 GW to 40 GW by 2030. This adjustment stems from a more conservative approach to large load additions (LLAs), particularly data center projects. PJM’s distinction between “firm” and “non-firm” proposals has led to aggressive scaling back of speculative projects, signaling a more measured trajectory for demand growth. These changes carry profound implications for capacity markets and long-term investment strategies.

Meanwhile, stakeholder debates around interconnection reform and expedited tracks for large loads, like data centers, continue. Proposals such as “Bring Your Own Generation” and external interconnection queues aim to balance reliability with the surge in data center demand. At the federal level, the Department of Energy (DOE)’s push for the Federal Energy Regulatory Commission (FERC) to standardize interconnection rules for loads above 20 MW has sparked resistance from some states, highlighting the tension between accelerating infrastructure and preserving jurisdictional authority.

As winter begins, market participants remain focused on outage recovery, weather volatility, and regulatory developments. While recent price softness suggests some easing of risk premiums, the underlying fundamentals — tight supply margins, evolving load forecasts, and policy uncertainty — ensure that volatility and price support will persist.

November 2025 comes in as the 14th warmest November nationally since 1950 based on gas-weighted heating degree days (HDDs). Much of the country averaged more than 3 degrees above normal, with a notable exception in parts of the Great Lakes, Mid-Atlantic, and Northeast regions. These regions averaged 1 to 3 degrees below normal thanks to cold periods around November 10 and the Thanksgiving holiday through the end of the month.

December 2025 is off to an unusually cold start, with the colder pattern forecasted to continue through at least mid-month, if not longer. Upstream patterns over the North Pacific Ocean continue to send rounds of colder air masses into the eastern U.S., aided by Arctic blocking. The first half of December is projected to be at least in the top-10 coldest since 1950 in many parts of the Midwest and East, with the potential to reach the top-five coldest. The colder pattern overall is a far cry from recent Decembers that have often averaged well above normal. The month overall could be one of the coldest we’ve experienced since the late 2000s.

Weak La Niña conditions remain present, though other large-scale features appear to be dominating weather in the U.S. so far this winter. Forecasts for the remaining winter months are largely unchanged officially, but the persistence of the cold pattern to start the season does offer cold risks. Seven of the last 10 colder-than-normal Decembers yielded below-normal temperatures in January, though the remaining years turned sharply warmer.