JPM-JPM Natural Gas and NGL Reservoir Despite Warm Early Start to Winter Heating Season...-20251103

JPM View: In this week’s Reservoir, we take a look at winter weather forecasts as we approach the key heating demand season for natural gas. Winter weather remains a front-of-mind topic for investors given its potential impact on natural gas storage balances, with current storage now sitting 4% above the 5-year average. On EQT’s 3Q25 conference call, management noted that early signs are pointing to a shift from El Niño to a moderate La Niña phase this winter, which could result in some of the coldest conditions in over a decade and typically brings below-normal temperatures to the U.S. Midwest and Northeast. La Niña is a climate pattern characterized by cooler-than-average sea surface temperatures in the Pacific,which pushes the jet stream northward and typically leads to warmer and drier conditions in the southern U.S. and colder and wetter winters in the North and Canada. La Niña can also increase the likelihood of a more severe hurricane season.The latest vendor forecasts are currently calling for ~505.5 HDDs in November,which compares to the 10yr/30yr average of 534.2/562.5 HDDs. In their 2025-2026 Winter Outlook, BloombergNEF similarly flagged the likelihood of a weak La Niña phase this winter, while also highlighting that the Quasi-Biennial Oscillation (QBO) is currently in its easterly phase, indicating an increased likelihood of sudden stratospheric warming (SSW) events, or changes in the jet stream that may bring cold Arctic air into the continental U.S. and Europe.Specifically, when the easterly phase of the QBO is active, as expected this year,the likelihood of a SSW event increases to ~75% based on historical data, which is nearly 2x as high as during the westerly or neutral phases. Combined with ongoing weak La Niña conditions, this pattern supports the potential for colder temperatures across the Midwest and Northwest U.S., which could significantly boost heating demand and lead to higher natural gas demand.