October Nymex natural gas (NGV26) on Tuesday closed up +0.129 (+4.55%).
Nat-gas prices recovered from a 1-week low on Tuesday and settled sharply higher on forecasts for hot US autumn weather, potentially boosting nat-gas demand from electricity providers to power increased air conditioning use. The Commodity Weather Group said Tuesday that forecasts shifted to hotter, with above-average temperatures expected in the South-Central US through October 6.
US (lower-48) dry gas production on Tuesday was 112.2 bcf/day (+3.1% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 74.6 bcf/day (+0.3% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 18.5 bcf/day (-0.6% w/w), according to BNEF.
A bearish medium-term factor for nat-gas prices is the market's expectation that a “Super El Niño” will bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, reducing heating demand for nat-gas.
As a positive factor for gas prices, the Edison Electric Institute reported last Wednesday that US (lower-48) electricity output in the week ended September 12 rose +16.1% y/y to 94,427 GWh (gigawatt hours). Also, US electricity output in the 52 weeks ending September 12 rose +3.3% y/y to 4,405,549 GWh.
As a bearish factor, the US Energy Information Administration (EIA) on August 11 projected that US nat-gas storage levels will swell to 3,985 bcf at the end of October, the highest level in 10 years and 5% above the five-year average. Last Monday, the EIA raised its 2027 US dry natural gas production estimate to 116.0 bcf/day from 115.3 bcf/day projected in July.
Last Thursday's weekly EIA report was bullish for nat-gas prices, as it showed a +44 bcf increase in US nat-gas inventories for the week ended September 11, below expectations of +48 and below the 5-year weekly average of +74 bcf. As of September 11, nat-gas inventories were down -3.9% y/y and +3.7% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of September 20, gas storage in Europe was 70% full, compared to the 5-year seasonal average of 86% full for this time of year.
Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ended September 18 rose by +2 to match the 3-year high of 134 rigs first set in February 2026.
