November Nymex natural gas (NGX25) on Thursday closed down by -0.078 (-2.59%).
Nov nat-gas prices on Thursday gave up an early advance and dropped to a new 3-week low. Warmer-than-normal US weather, which is expected to lead to reduced heating demand for natural gas, is weighing on gas prices. Forecaster Atmospheric G2 stated that temperatures across most of the US for October 20-24 will be above normal, as “there are still no signs of any noteworthy cold air intrusions and no appreciable cold air over Canada.” Also, temperatures in the interior of North America are forecast to remain warmer-than-normal for October 25-29.
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Nat-gas prices initially moved higher on Thursday due to a smaller-than-expected build in weekly nat-gas storage. The EIA reported that nat-gas inventories rose +80 bcf for the week ended October 10, below expectations of +81 bcf and the five-year average of +83 bcf.
Higher US nat-gas production is also a bearish factor for prices. Last Tuesday, 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.
US (lower-48) dry gas production on Thursday was 107.0 bcf/day (+3.8% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 71.7 bcf/day (-6.2% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 16.4 bcf/day (+5.5% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported 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.
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 14, gas storage in Europe was 83% full, compared to the 5-year seasonal average of 91% 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 10 rose by +2 to 120 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
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