Nat-Gas Prices Retreat as Weekly EIA Inventories Climb Above Expectations

November Nymex natural gas prices fell by 3.07% on Thursday, primarily due to a larger-than-expected weekly inventory build of +87 bcf, which exceeded market expectations and the five-year average, indicating ample supply. This bearish pressure was compounded by near-record high US dry gas production, with the EIA raising its 2025 forecast, and mixed weather outlooks, despite some supportive factors like increased electricity output and rising LNG exports.

Analysis

November Nymex natural gas (NGX25) prices declined by 3.07% on Thursday, primarily driven by a larger-than-anticipated weekly storage build. The EIA reported an +87 bcf increase in inventories for the week ended October 17, surpassing market expectations of +83 bcf and the five-year average of +77 bcf, signaling robust supply levels.

This bearish pressure is exacerbated by near-record high US dry gas production, which stood at 107.9 bcf/day (+5.4% y/y). The EIA further reinforced this outlook by raising its 2025 production forecast to 107.14 bcf/day, while active drilling rigs recently reached a 2-year high of 121.

Mixed weather forecasts, shifting cooler in some regions but warmer elsewhere, also undercut prices. Despite supportive factors like a +4.0% year-over-year increase in US electricity output and rising LNG net flows to 16.6 bcf/day, the overwhelming supply-side signals dominated market sentiment.

Key Decisions for Investors

• Investors should maintain a cautious stance on natural gas given the current oversupply indicated by higher-than-expected storage builds and near-record production
• Monitor upcoming EIA storage reports and evolving weather forecasts for any significant deviations that could alter short-term demand dynamics
• Assess the long-term balance between robust US production, increasing LNG exports, and domestic consumption trends to identify potential inflection points