November Nymex natural gas (NGX25) on Friday closed down by -0.163 (-4.99%).

Nov nat-gas prices dropped to a 2.5-week low on Friday and settled sharply lower on ample storage and warmer US weather forecasts, which should curb heating demand for nat-gas.   As of October 3, US nat-gas supplies in storage are +4.5% above their 5-year seasonal average, signaling adequate supplies.  Warmer-than-normal US temperatures are also weighing on nat-gas prices as forecaster Atmospheric G2 said on Friday that the outlook turned warmer for the eastern half of the country for October 20-24.  

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 Friday was 108.1  bcf/day (+5.0% y/y), according to BNEF.  Lower-48 state gas demand on Friday was 66.0 bcf/day (-6.7% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Friday were 16.0 bcf/day (+1.6% 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.

Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended October 3 rose +80 bcf, above the market consensus of +77 bcf but below the 5-year weekly average of +94 bcf.  As of October 3, nat-gas inventories were up +0.3% y/y, and were +4.5% above their 5-year seasonal average, signaling adequate nat-gas supplies.  As of October 8, gas storage in Europe was 83% full, compared to the 5-year seasonal average of 91% full for this time of year.

Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending October 10 rose by +2 to 120 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.