October Nymex natural gas (NGV25) on Thursday closed down -0.161 (-5.19%).

Oct nat-gas prices sold off sharply on Thursday due to a larger-than-expected build in weekly EIA nat-gas inventories.  The EIA reported Thursday that nat-gas inventories rose +90 bcf in the week ended September 12, above expectations of +81 bcf and well above the five-year average for this time of year of +74 bcf.  

Losses in nat-gas prices accelerated Thursday on cooler weather forecasts for late September, which will curb nat-gas demand from electricity providers to power air conditioning.   Forecaster Atmospheric G2 said Thursday that forecasts shifted cooler for the middle of the US for September 23-27, and cooler weather will persist over the eastern two-thirds of the US for September 28-October 2.  

Higher US nat-gas production has recently been a bearish factor for prices.  Last Tuesday, the EIA raised its forecast for 2025 US nat-gas production by +0.2% to 106.63 bcf/day from August's estimate of 106.40 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 Thursday was 107.2 bcf/day (+5.7% y/y), according to BNEF.  Lower-48 state gas demand on Thursday was 74.0 bcf/day (-0.8% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Thursday were 15.4  bcf/day (+5.6% 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 September 13 rose +0.83% y/y to 81,346 GWh (gigawatt hours), and US electricity output in the 52-week period ending September 13 rose +2.98% y/y to 4,265,230 GWh.

Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended September 12 rose +90 bcf, above the market consensus of +81 bcf and above the 5-year weekly average of +74 bcf.  As of September 12, nat-gas inventories were down -0.3% y/y, but were +6.3% above their 5-year seasonal average, signaling adequate nat-gas supplies.  As of September 16, gas storage in Europe was 81% full, compared to the 5-year seasonal average of 87% full for this time of year.

Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ending September 12 was unchanged at 118 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.