October Nymex natural gas (NGV26) on Wednesday closed up +0.058 (+1.96%).
Nat-gas prices rallied to a 2.5-month nearest-futures high on Wednesday and settled sharply higher on the outlook for a shrinking US gas storage surplus. The consensus is that Thursday’s EIA nat-gas inventories for the week ended September 18 rose by +51 bcf, well below the five-year average for the week of +76 bcf, which should shrink the surplus that currently stands at 3.7% above the five-year seasonal average.
Don’t Miss a Day:
From crude oil to coffee, sign up free for Barchart’s best-in-class commodity analysis.
Prices fell from their best level on Wednesday as the US weather forecast turned cooler, potentially reducing nat-gas demand from electricity providers to power air conditioning. The Commodity Weather Group said Wednesday that forecasts shifted cooler, with normal seasonal weather expected across most of the US from September 28 to October 2.
US (lower-48) dry gas production on Wednesday was 112.1 bcf/day (+2.9% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 74.0 bcf/day (-4.9% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 18.5 bcf/day (-0.9% 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 positive factor for gas prices, the Edison Electric Institute reported last Wednesday that US (lower-48) electricity output in the week ended September 12 rose +16.1% y/y to 94,427 GWh (gigawatt hours). Also, US electricity output in the 52 weeks ending September 12 rose +3.3% y/y to 4,405,549 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 bullish for nat-gas prices, as it showed a +44 bcf increase in US nat-gas inventories for the week ended September 11, below expectations of +48 and below the 5-year weekly average of +74 bcf. As of September 11, nat-gas inventories were down -3.9% y/y and +3.7% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of September 21, gas storage in Europe was 70% full, compared to the 5-year seasonal average of 86% 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 18 rose by +2 to match the 3-year high of 134 rigs first set in February 2026.
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.
