November Nymex natural gas (NGX26) on Wednesday closed up +0.015 (+0.50%).

Nat-gas prices recovered from early losses on Wednesday and settled higher on expectations for a smaller-than-average build in weekly gas storage. The consensus is that Thursday’s weekly EIA nat-gas inventories rose +63 bcf for the week ending September 25, below the 5-year average of +80 bcf.

Don’t Miss a Day: From crude oil to coffee, sign up free for Barchart’s best-in-class commodity analysis.

Nat-gas prices initially moved lower on Wednesday as forecasts for seasonal US weather could potentially limit nat-gas demand for heating or air conditioning. On Wednesday, the Commodity Weather Group said normal seasonal weather is expected across the eastern and southern US from October 5-14.

US (lower-48) dry gas production on Wednesday was 110.4 bcf/day (+1.3% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 71.6 bcf/day (+0.6% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 18.7 bcf/day (-0.5% w/w), according to BNEF.

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 negative factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended September 26 fell -0.85% y/y to 83,811 GWh (gigawatt hours). However, US electricity output in the 52 weeks ending September 26 rose +3.27% y/y to 4,411,446 GWh.

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. Last Monday, the EIA raised its 2027 US dry natural gas production estimate to 116.0 bcf/day from 115.3 bcf/day projected in July.

Last Thursday's weekly EIA report was mixed for nat-gas prices, as it showed a +53 bcf increase in US nat-gas inventories for the week ended September 18, above expectations of +51 but below the 5-year weekly average of +76 bcf. As of September 18, nat-gas inventories were down -4.5% y/y and +2.9% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of September 27, gas storage in Europe was 71% full, compared to the 5-year seasonal average of 87% full for this time of year.

Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ended September 25 rose by +1 to a new 3-year high of 135 rigs.

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.
  • Natural Gas Moves Toward its Peak Season with LNG Demand Rising
  • Is it Time to Begin Accumulating Natural Gas?
  • Hoping for Lower Prices at the Gas Pump? After Exxon Doubles Profits, CEO Darren Woods Says ‘I Wouldn’t Hold My Breath.’
  • 1 ETF to Buy to Exploit an Unnatural Divergence Between Energy Stocks and Natural Gas Prices