November Nymex natural gas (NGX25) on Tuesday closed up by +0.077 (+2.27%).
Nov nat-gas prices moved higher for the third consecutive session on Tuesday and posted a 1.5-week high. Forecasts for colder US weather in the eastern two-thirds of the country will boost heating demand for natural gas and are pushing prices higher. Forecaster Atmospheric G2 said Tuesday that forecasts shifted cooler over a large portion of the central and eastern US for October 26-30, and shifted cooler over the eastern two-thirds of the country for October 31 to November 4.
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US (lower-48) dry gas production on Tuesday was 104.6 bcf/day (+1.1% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 71.5 bcf/day (+4.9% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 15.9 bcf/day (-1.7% w/w), according to BNEF. According to a report on Monday from the EIA, US nat-gas pipeline exports to Mexico rose to a record 7.5 bcf/day in May.
Higher US nat-gas production is a bearish factor for prices. On October 7, the EIA raised its forecast for 2025 US nat-gas production by +0.5% to 107.14 bcf/day from September's estimate of 106.60 bcf/day. US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.
As a supportive factor for gas prices, the Edison Electric Institute reported last Thursday that US (lower-48) electricity output in the week ended October 11 rose +5.1% y/y to 77,390 GWh (gigawatt hours), and US electricity output in the 52-week period ending October 11 rose +2.86% y/y to 4,277,958 GWh.
Last Thursday's weekly EIA report was supportive for nat-gas prices since nat-gas inventories for the week ended October 10 rose +80 bcf, below the market consensus of +81 bcf and below the 5-year weekly average of +83 bcf. As of October 10, nat-gas inventories were up +0.4% y/y and were +4.3% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of October 19, gas storage in Europe was 83% full, compared to the 5-year seasonal average of 92% 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 October 17 rose by +1 to 121 rigs, just 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.
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