Natural Gas Prices Drop Amid Warm October Forecasts

October’s warmer weather forecasts continue to weigh on natural gas prices

On Friday, November Nymex natural gas (NGX24) closed at -0.089, reflecting a decrease of 3.79%. This decline extends a two-week selling trend, marking a one-month low for near-month futures.

The National Weather Service’s report of significantly above-normal temperatures across most of the contiguous United States is contributing to this downward pressure on prices. With less demand for heating, gas prices are struggling to maintain stability as October continues.

According to BNEF, dry gas production in the Lower 48 states averaged 103.1 bcf/day, down 0.3% year-on-year. Meanwhile, demand in these states stood at 70.1 bcf/day, which is a 1% increase compared to last year. Notably, net LNG flows to U.S. export terminals rose to 13.5 bcf/day, a weekly increase of 7.1%.

Higher electricity output in the U.S. could be beneficial for natural gas demand from utility companies. The Edison Electric Institute indicated that total U.S. electricity output in the week ending October 12 surged by 6.76% year-on-year, reaching 73,640 GWh. Moreover, over the past 52-week period, U.S. electricity output grew by 1.62% compared to the previous year, totaling 4,158,968 GWh.

The weekly report from the Energy Information Administration (EIA) had a neutral impact on gas prices. Natural gas inventories for the week ending October 11 saw an increase of 76 bcf, aligning with expectations but falling short of the five-year average build of 96 bcf for this time of year. Currently, inventories are up by 2.2% year-on-year and are 4.6% above their five-year seasonal average, highlighting sufficient natural gas supplies. In Europe, gas storage reached 95% capacity as of October 13, surpassing the five-year average of 92% full.

According to Baker Hughes, the count of active natural gas drilling rigs in the U.S. decreased by two to a total of 99 rigs for the week ending October 18. This number remains slightly higher than the recent low of 94 rigs recorded in early September. Since reaching a five-year peak of 166 rigs in September 2022, the count has generally declined, falling from a pandemic-era record low of 68 rigs in July 2020.

More Natural Gas News from Barchart

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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.