November Nymex natural gas (NGX25) on Wednesday closed up +0.031 (+0.93%).
Nov nat-gas prices on Wednesday recovered from a 1-week low and settled higher. Short-covering emerged in nat-gas on Wednesday, pushing prices higher ahead of the expiration of the November nat-gas contract. Nat-gas prices initially moved lower on Wednesday on forecasts of warmer US temperatures, which will reduce nat-gas heating demand. Forecaster Atmospheric G2 said Wednesday that forecasts shifted to above-average in the West and Midcontinent for November 3-7, and turned warmer for most of the US for November 8-12.
Expectations for a larger-than-seasonal build in nat-gas storage are also bearish for prices. The consensus is that Thursday's weekly EIA nat-gas inventories will climb by +74 bcf for the week ended October 24, above the five-year average for this time of year of +67 bcf.
US (lower-48) dry gas production on Wednesday was 106.9 bcf/day (+3.2% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 78.8 bcf/day (+12.1% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 16.7 bcf/day (+4.2% w/w), according to BNEF.
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 Wednesday that US (lower-48) electricity output in the week ended October 25 rose +1.9% y/y to 72,772 GWh (gigawatt hours), and US electricity output in the 52-week period ending October 25 rose +2.9% y/y to 4,282,176 GWh.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended October 17 rose +87 bcf, above the market consensus of +83 bcf and the 5-year weekly average of +77 bcf. As of October 17, nat-gas inventories were up +0.6% y/y and were +4.5% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of October 21, 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 24 was unchanged at 121 rigs, just below the 2.25-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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