November Nymex natural gas futures declined by 4.72% on Wednesday, primarily driven by a mixed U.S. weather outlook suggesting reduced heating demand and, more significantly, an upward revision in the EIA's 2025 U.S. natural gas production forecast to 107.14 bcf/day. This elevated production outlook, coupled with current output near record highs and increasing active drilling rigs, outweighed supportive factors such as rising electricity output and an anticipated weekly inventory build below the five-year average, signaling continued supply-side pressure on prices.
November Nymex natural gas (NGX25) on Wednesday closed down by -0.165 (-4.72%). Nov nat-gas prices gave up an early advance on Wednesday and settled sharply lower. Prices came under pressure on Wednesday from a mixed US weather forecast, which could reduce heating demand for nat-gas. Forecaster Atmospheric G2 said Wednesday that forecasts shifted cooler for the eastern two-thirds of the US for October 13-17, but temperatures trended warmer in the southern and eastern US for October 18-22. Higher US nat-gas production is a bearish factor for prices. On Tuesday, 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. US (lower-48) dry gas production on Wednesday was 106.8 bcf/day (+4.7% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 71.5 bcf/day (-1.0% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 15.5 bcf/day (unchanged 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 October 4 rose +2.91% y/y to 80,972 GWh (gigawatt hours), and US electricity output in the 52-week period ending October 4 rose +2.89% y/y to 4,274,208 GWh. The consensus is that Thursday's weekly EIA nat-gas inventories will climb by +77 bcf for the week ended October 3, below the five-year average for this time of year of +94 bcf. Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended September 26 rose +53 bcf, below the market consensus of +64 bcf and below the 5-year weekly average of +85 bcf. As of September 26, nat-gas inventories were up +0.4% y/y, and were +5.0% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of October 5, gas storage in Europe was 83% full, compared to the 5-year seasonal average of 90% 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 3 rose by +1 to 118 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. 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. More news from Barchart - Can Natural Gas Explode Higher Over the Coming Weeks? - What Our Top Chart Strategist is Watching on the Natural Gas Futures Charts Now - Where are Natural Gas Prices Heading? - Energy Commodities in Q2- Where are they Heading in Q3? The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. November Nymex natural gas prices experienced a significant decline of 4.72% on Wednesday, primarily influenced by the Energy Information Administration's (EIA) upward revision of its 2025 US natural gas production forecast by 0.5% to 107.14 bcf/day. This revised outlook, coupled with current US dry gas production near record highs at 106.8 bcf/day (+4.7% y/y), underscores a persistent supply-side strength in the market. The bearish sentiment was further reinforced by a recent increase in active US natural gas drilling rigs to 118, which is close to a 2-year peak. This consistent production capacity indicates that the market remains well-supplied, outweighing any potential price support from rising US electricity output, which saw a 2.91% year-over-year increase in the week ended October 4. Demand-side factors also contributed to the price pressure; a mixed US weather forecast suggests warmer trends in key southern and eastern regions for late October, potentially reducing heating demand. Although the consensus expects a weekly EIA inventory build of +77 bcf, below the five-year average, overall US nat-gas inventories are still 5.0% above their 5-year seasonal average, signaling adequate supplies and limiting upside potential.
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