Nat-Gas Prices Decline on Ample Storage and Warmer US Weather

November Nymex natural gas prices fell by 4.99% to a 2.5-week low, primarily driven by ample US storage levels, which are 4.5% above the 5-year seasonal average, and warmer US weather forecasts expected to curb heating demand. Further bearish pressure stems from the EIA's raised 2025 production forecast to 107.14 bcf/day, signaling an oversupplied market amidst reduced demand expectations.

Analysis

November Nymex natural gas (NGX25) closed down 4.99%, reaching a 2.5-week low, primarily driven by an oversupplied market. This decline is attributed to ample US natural gas storage, which is +4.5% above its 5-year seasonal average, and warmer US weather forecasts for October 20-24, anticipated to significantly curb heating demand.

The supply side remains robust, with the EIA raising its 2025 US natural gas production forecast by +0.5% to 107.14 bcf/day. Current US dry gas production is near record highs at 108.1 bcf/day (+5.0% y/y), while lower-48 state gas demand simultaneously decreased by -6.7% y/y to 66.0 bcf/day, exacerbating the supply surplus.

Despite a +2.91% y/y increase in US electricity output, the weekly EIA report confirmed an +80 bcf inventory build, surpassing the market consensus of +77 bcf. This reinforces the narrative of persistent oversupply and muted demand, contributing to the overall moderately negative sentiment and bearish tone in the natural gas market.

Key Decisions for Investors

• Investors should closely monitor updated weather forecasts for any significant shifts towards colder temperatures, which could alter demand expectations.
• Evaluate current natural gas futures positions given the persistent bearish supply/demand fundamentals and high storage levels.
• Pay attention to US production trends, active rig counts, and LNG export terminal flows for potential supply adjustments or demand catalysts.