Last week’s EIA report showed a 40 Bcf injection against a 34 Bcf estimate. Stocks as of that report were down 2.7% from a year ago but still 4.8% above the five-year seasonal average.
The EIA projects inventories hitting 3,985 Bcf by the end of October, the highest end-of-October level in 10 years. That projection sits over the market and it means one below-normal build is not going to change the conversation. The bulls need a string of them. They are getting one report at a time and production is not cooperating.
Production Is Still Winning
Lower-48 dry gas output hit 112.3 Bcf per day Wednesday, up 4.0% from a year ago according to BNEF. Demand came in at 76.3 Bcf per day, up 2.4% year-over-year. Demand is improving. Production is improving faster. That gap is why rallies keep stalling before they can build real momentum.
Baker Hughes added two gas rigs last week bringing the count to 132, just below the three-year high of 134 from February. More rigs means more supply in the pipeline over the coming months. The EIA also raised its 2027 dry-gas production forecast to 116.0 Bcf per day. The production story is not getting smaller. It is getting bigger and every rig added makes the bull case harder to sustain without a weather event or a storage surprise.
The European Bid Faded at the Wrong Time
U.S. LNG exports slipped to 18.5 Bcf per day Wednesday, down 4.7% from the prior week. European gas prices pulled back to a one-week low after hitting a 3.75-year high Monday. European storage sat at 68% full as of September 14 against a five-year average of 85%. The winter shortage story is still alive over there. But European prices retreated at the same time October natural gas was testing $3 and that removed the overseas support that had been helping the bid earlier in the week.
