Nat-Gas Prices Continue to Retreat on Ample Inventories

Core Insights - Natural gas prices have declined, with November Nymex natural gas closing down by 1.20% on Friday, following a loss of 3.07% on Thursday, reaching a new one-week low [1] - The bearish trend in natural gas prices is attributed to a higher-than-expected increase in inventories reported by the EIA, which rose by 87 billion cubic feet (bcf) for the week ending October 17, surpassing both market expectations and the five-year average [1][6] Production and Demand - US dry gas production reached 108.5 bcf/day, reflecting a year-over-year increase of 5.5%, while gas demand was reported at 76.1 bcf/day, up 0.6% year-over-year [3] - LNG net flows to US export terminals were estimated at 16.6 bcf/day, marking a week-over-week increase of 2.0% [3] Inventory and Supply Factors - The EIA's report indicated that natural gas inventories were 0.6% higher year-over-year and 4.5% above the five-year seasonal average, suggesting sufficient supply levels [6] - In Europe, gas storage was reported to be 83% full as of October 21, compared to the five-year average of 92% for this time of year [6] Weather Impact - A mixed weather forecast has negatively impacted natural gas prices, with cooler temperatures expected across much of the central and eastern US from October 29 to November 2, while warmer conditions are anticipated for the eastern two-thirds of the US and cooler weather in the West from November 3 to 7 [2] Production Forecast - The EIA has raised its forecast for US natural gas production in 2025 by 0.5% to 107.14 bcf/day, indicating that production levels are near record highs, supported by an increase in active natural gas rigs [4]