October Nymex natural gas (NGV25) on Wednesday closed down -0.003 (-0.10%).
Oct nat-gas prices fell from a 1-week high on Wednesday and settled slightly lower on expectations for a larger-than-average build in weekly EIA nat-gas inventories. The consensus is that Thursday's weekly nat-gas inventories will rise rose by +81 bcf for the week ended September 12, above the five-year average of +74 bcf.
Nat-gas prices initially rose to a 1-week high on Wednesday on forecasts for late summer heat in the US that will boost nat-gas demand and limit the buildup of inventories ahead of the critical winter heating season. Forecaster Atmospheric G2 said Wednesday that forecasts remained hotter-than-normal across the majority of the US for September 22-26, which will boost nat-gas demand from electricity providers to power increased air conditioning usage. Also, forecasts shifted warmer across the north-central US for September 27-October 1.
Higher US nat-gas production has recently been a bearish factor for prices. Last Tuesday, the EIA raised its forecast for 2025 US nat-gas production by +0.2% to 106.63 bcf/day from August's estimate of 106.40 bcf/day. US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.
US (lower-48) dry gas production on Wednesday was 106.0 bcf/day (+5.0% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 73.3 bcf/day (+0.6% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 15.4 bcf/day (+5.6% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended September 13 rose +0.83% y/y to 81,346 GWh (gigawatt hours), and US electricity output in the 52-week period ending September 13 rose +2.98% y/y to 4,265,230 GWh.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended September 5 rose +71 bcf, above the market consensus of +68 bcf and above the 5-year weekly average of +56 bcf. As of September 5, nat-gas inventories were down -1.3% y/y, but were +6.0% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of September 14, gas storage in Europe was 81% 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 ending September 12 was unchanged at 118 rigs, slightly below the 2-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.
