November Nymex natural gas (NGX25) on Wednesday closed up sharply by +0.173 (+5.24%).
Nov nat-gas prices extended this week’s sharp rally on Wednesday and posted a 2.5-month nearest-futures high. Forecasts for below-normal US autumn temperatures, which could boost heating demand for nat-gas are pushing prices higher. Forecaster Vaisala stated that a cold front is expected to move from the Midwest to the East, with cooler temperatures anticipated during the period of October 6-10. Additionally, below-normal temperatures are forecasted in the West for October 11-15.
Don’t Miss a Day: From crude oil to coffee, sign up free for Barchart’s best-in-class commodity analysis.
Nat-gas prices also garnered support on Wednesday, driven by expectations for a smaller-than-normal build in seasonal gas storage. The consensus is that Thursday's weekly EIA nat-gas inventories will increase by +64 bcf for the week ended September 26, below the five-year average for the week of +85 bcf.
Higher US nat-gas production has recently been a bearish factor for prices. Last month, the EIA raised its forecast for 2025 US nat-gas production by +0.2% to 106.63 bcf/day from August's estimate of 106.40 bcf/day. US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.
US (lower-48) dry gas production on Wednesday was 107.5 bcf/day (+5.8% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 66.2 bcf/day (-7.5% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 15.4 bcf/day (-1.4% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended September 27 rose +5.96% y/y to 84,530 GWh (gigawatt hours), and US electricity output in the 52-week period ending September 27 rose +2.9% y/y to 4,271,916 GWh.
Last Thursday's weekly EIA report was neutral for nat-gas prices since nat-gas inventories for the week ended September 19 rose +75 bcf, just above the market consensus of +74 bcf but below the 5-year weekly average of +76 bcf. As of September 19, nat-gas inventories were up +0.5% y/y, and were +6.1% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of September 28, gas storage in Europe was 83% full, compared to the 5-year seasonal average of 89% full for this time of year.
Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ending September 26 fell by -1 to 117 rigs, slightly below the 2-year high of 124 rigs posted on August 1. In the past year, the number of gas rigs has risen from the 4.5-year low of 94 rigs reported in September 2024.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
