Nat-Gas Prices Recover Ahead of November Contract Expiration

Core Insights - Natural gas prices recovered from a one-week low, closing higher due to short-covering ahead of the expiration of the November contract [2] - Forecasts of warmer temperatures in the U.S. are expected to reduce heating demand for natural gas, contributing to price fluctuations [2] - Expectations for a larger-than-seasonal build in natural gas storage are bearish for prices, with a consensus increase of +74 billion cubic feet (bcf) in inventories [3] Production and Demand - U.S. dry gas production reached 106.9 bcf/day, marking a +3.2% year-over-year increase, while gas demand was 78.8 bcf/day, up +12.1% year-over-year [4] - The EIA raised its forecast for 2025 U.S. natural gas production by +0.5%, indicating a trend towards record-high production levels [5] Electricity Output - U.S. electricity output rose by +1.9% year-over-year to 72,772 GWh for the week ending October 25, supporting natural gas prices [6] Inventory Levels - Recent EIA reports indicated a rise in natural gas inventories, with an increase of +87 bcf, surpassing market expectations and the five-year average [7] - As of October 21, European gas storage was 83% full, below the five-year seasonal average of 92% [7]