Nat-Gas Prices Weaken as European Gas Prices Plunge

October Nymex natural gas (NGV26) on Monday closed down -0.076 (-2.61%).

Nat-gas prices tumbled to a 1-week low on Monday and settled lower on negative carryover from a -7% plunge in European nat-gas prices to a 2-week low. 

Losses in nat-gas prices were contained on Monday by forecasts for hotter US weather, which could boost nat-gas demand from electricity providers for air conditioning.  The Commodity Weather Group said Monday that forecasts shifted to hotter, with above-average temperatures expected across the US Gulf Coast through September 30.

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. 

US (lower-48) dry gas production on Monday was 112.8 bcf/day (+4.0% y/y), according to BNEF.  Lower-48 state gas demand on Monday was 74.1 bcf/day (+7.9% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Monday were 18.2 bcf/day (-6.8% w/w), according to BNEF.

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 19, gas storage in Europe was 70% full, compared to the 5-year seasonal average of 85% 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.