November Nymex natural gas (NGX26) on Thursday closed down -0.035 (-1.09%).
Nat-gas prices fell from a 1.5-week high on Thursday and settled lower after weekly nat-gas storage rose more than expected, sparking long liquidation in nat-gas futures. The EIA reported Thursday that nat-gas inventories rose +85 bcf in the week ended October 2, above expectations of +82 bcf.
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Nat-gas prices added to their losses on Thursday after US weather forecasts turned warmer, potentially reducing heating demand for nat-gas. The Commodity Weather Group said Thursday that forecasts shifted warmer, with above-average temperatures expected across most of the US through October 12.
Nat-gas prices initially moved higher on Thursday as the outlook for adverse weather in the US Gulf pushed producers to shut in nat-gas production. As of Thursday, the US shut in about 1.127 billion cubic feet per day, or about 57% of natural gas production in the Gulf in response to Hurricane Isaias forming in the US Gulf.
US (lower-48) dry gas production on Thursday was 110.3 bcf/day (+1.8% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 72.2 bcf/day (+0.8% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 19.0 bcf/day (+5.5% w/w), according to BNEF.
As a positive factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended October 3 rose +3.32% y/y to 83,661 GWh (gigawatt-hours). Also, US electricity output in the 52 weeks ending October 2 rose +3.27% y/y to 4,414,135 GWh.
A bearish medium-term factor for nat-gas prices is the market’s expectation that a “Super El Niño” will bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, reducing heating demand for nat-gas.
As a bearish factor, the US Energy Information Administration (EIA) on August 11 projected that US nat-gas storage levels will swell to 3,985 bcf at the end of October, the highest level in 10 years and 5% above the five-year average. On September 21, the EIA raised its 2027 US dry natural gas production estimate to 116.0 bcf/day from 115.3 bcf/day projected in July.
Thursday’s weekly EIA report was slightly bearish for nat-gas prices, showing an +85 bcf increase in US nat-gas inventories for the week ended October 2, above expectations of +82 but below the 5-year weekly average of +96 bcf. As of October 2, nat-gas inventories were down -3.9% y/y and +2.0% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of October 6, gas storage in Europe was 73% full, compared to the 5-year seasonal average of 88% full for this time of year.
