US natural gas futures dropped sharply on October 26, 2026, hitting a six-month low as warmer-than-expected weather forecasts reduced demand expectations for the winter heating season. Prices fell as much as 5.4%, marking the lowest level since April, as traders adjusted to the shifting outlook.
The sudden shift in weather forecasts reinforced growing confidence among traders that a Super El Niño pattern will lead to unusually mild winter conditions. This would significantly cut demand for natural gas, which is heavily used for heating and power generation during colder months.
Hedge funds have been aggressively betting on lower prices, amassing the largest short position in data going back to 2013. This positions them to profit from further declines if the warm winter outlook holds true.
The market's bearish sentiment could deepen as more traders adopt similar strategies, anticipating sustained low demand for natural gas in the coming weeks.