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.
