Will Bearish Storage Data Cap Further Gains?
Thursday’s EIA report showed a +80 Bcf injection for the week ended October 3, exceeding expectations of +77 Bcf but below the five-year average build of +94 Bcf. Total working gas now stands at 3,641 Bcf—up 157 Bcf from the five-year average and 23 Bcf above last year’s levels. These figures reinforce the view that U.S. gas supplies are more than adequate for the season, capping upside momentum and increasing downside risk.
Inventories are on track to exceed 3.9 Tcf before winter, and with production holding near record highs—107.0 Bcf/d as of Thursday according to BNEF—any upside driven by early heating demand is likely to face strong resistance from ample supply.
What Role Are Weather Models and Demand Trends Playing?
Weather forecasts remain mixed. A cool front moving through the Great Lakes and Northeast will bring seasonal demand through mid-October, but the broader outlook continues to favor light-to-moderate consumption. Forecasts from Vaisala now suggest cooler conditions between October 14–23 in much of the central and eastern U.S., but with lower-48 state demand reported at just 71.6 Bcf/d Thursday (+0.2% y/y), traders appear unconvinced that the early cold will materially tighten balances.
Electricity demand offers a mild bullish offset. The Edison Electric Institute reported a 2.91% y/y rise in U.S. electricity generation for the week ending October 4. However, LNG flows—while steady at 15.8 Bcf/d—have not increased enough to significantly alter the near-term oversupply picture.
Is Production Growth Keeping Bulls in Check?
The EIA raised its 2025 U.S. production forecast to 107.14 Bcf/d this week, a 0.5% increase over last month’s estimate. Drilling activity remains strong, with gas-directed rigs at 118 as of October 3, just shy of the 2-year high. These developments continue to pressure prices by reinforcing supply-side strength, particularly as demand growth struggles to match pace.
