November Nymex natural gas (NGX25) on Wednesday closed up sharply by +0.173 (+5.24%).
Nov nat-gas prices extended this week's sharp rally on Wednesday and posted a 2.5-month nearest-futures high. Forecasts for below-normal US autumn temperatures, which could boost heating demand for nat-gas are pushing prices higher. Forecaster Vaisala stated that a cold front is expected to move from the Midwest to the East, with cooler temperatures anticipated during the period of October 6-10. Additionally, below-normal temperatures are forecasted in the West for October 11-15.
Nat-gas prices also garnered support on Wednesday, driven by expectations for a smaller-than-normal build in seasonal gas storage. The consensus is that Thursday's weekly EIA nat-gas inventories will increase by +64 bcf for the week ended September 26, below the five-year average for the week of +85 bcf.
Higher US nat-gas production has recently been a bearish factor for prices. Last month, 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 107.5 bcf/day (+5.8% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 66.2 bcf/day (-7.5% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 15.4 bcf/day (-1.4% 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 27 rose +5.96% y/y to 84,530 GWh (gigawatt hours), and US electricity output in the 52-week period ending September 27 rose +2.9% y/y to 4,271,916 GWh.
Last Thursday's weekly EIA report was neutral for nat-gas prices since nat-gas inventories for the week ended September 19 rose +75 bcf, just above the market consensus of +74 bcf but below the 5-year weekly average of +76 bcf. As of September 19, nat-gas inventories were up +0.5% y/y, and were +6.1% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of September 28, gas storage in Europe was 83% full, compared to the 5-year seasonal average of 89% 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 26 fell by -1 to 117 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.
