On Tuesday, the November Nymex natural gas contract (NGX25) saw an increase of +0.141, a rise of +4.20%.
The pricing for November natural gas surged on Tuesday, driven by updated U.S. weather forecasts indicating cooler conditions in mid-October, which are expected to heighten heating needs for natural gas. According to forecaster Atmospheric G2, the outlook changed to cooler temperatures for areas on the East and West Coasts from October 12-16, as well as for the Northeast and West Coast during October 17-21.
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The increased natural gas production in the U.S. is a bearish influence on prices. Recently, the EIA upgraded its projection for U.S. natural gas output in 2025, adjusting it by +0.5% to 107.14 bcf/day, up from a previous estimate of 106.60 bcf/day made in September. Current natural gas production levels are approaching record highs, with the number of active rigs also hitting a two-year peak.
On Tuesday, U.S. dry gas production in the lower 48 states was reported at 105.9 bcf/day (+3.7% year-on-year) by BNEF. Similarly, demand for gas in the lower 48 states was recorded at 69.0 bcf/day (-5.8% year-on-year). Estimated net LNG flows to U.S. export terminals on Tuesday also fell to 15.0 bcf/day (-4.4% week-on-week), according to BNEF.
Support for natural gas prices was observed last Wednesday when the Edison Electric Institute stated that U.S. electricity production in the lower 48 states rose by +5.96% year-on-year to 84,530 GWh during the week ending September 27, with the total output for the 52-week period increasing by +2.9% year-on-year to 4,271,916 GWh.
The earlier EIA report from last Thursday was favorable for natural gas prices, as inventories increased by +53 bcf for the week ending September 26, which was below the anticipated +64 bcf and well below the five-year average of +85 bcf. By September 26, inventories were up +0.4% year-on-year and stood +5.0% above the five-year seasonal average, indicating sufficient supply levels. As of October 5, European gas storage was 83% full, contrasted with a five-year average of 90% for this time of year.
Baker Hughes reported last Friday that the count of active natural gas drilling rigs in the U.S. increased by +1 to 118 rigs for the week ending October 3, falling slightly below the two-year peak of 124 rigs reached on August 1. Over the past year, the number of gas rigs has risen from a four-and-a-half-year low of 94 reported in September 2024.
As of the publication date, Rich Asplund had no direct or indirect holdings in any of the securities mentioned. The information and data provided in this article are strictly for informative purposes. This article was initially published on Barchart.com
