U.S. Gas Closes at $3.02 as Warm Weather Looms and Inventories Top Average
Key Facts
U.S. natural gas closed at $3.02 on October 26, according to EL7 data, after closing at $2.64 on October 23 and $3.039 on October 19. The reading comes as weather forecasts point to above-normal temperatures across broad areas of the United States from November 2 to 8. That could limit growth in heating-related demand early in the season, while inventories remain above their five-year average. The market begins the winter withdrawal season on November 1, making storage levels and cold-weather forecasts key factors in tracking the supply-demand balance. The Energy Information Administration is scheduled to release its next weekly storage report on October 29.
The Energy Information Administration projected that gas inventories would reach 3,850 billion cubic feet by the end of October, after estimating end-September stocks at 3,523 billion and projecting an addition of 328 billion cubic feet during the month. If that estimate is realized, the heating season will begin on November 1 with inventories 2% above the five-year average. The agency said above-average inventories at the start of the withdrawal season provide additional supplies to meet winter heating demand. That level gives the market an additional resource as seasonal withdrawals begin, when consumers rely on stored gas to meet heating needs. But the end-October estimate remains an agency forecast, while next week’s report will provide a more current reading on the inventory trajectory.
The Energy Information Administration’s latest data showed working gas in storage at 3,644 billion cubic feet for the week ended October 16, up 77 billion from the previous week. Despite the increase, inventories remained 152 billion cubic feet below their level a year earlier. They were, however, 35 billion cubic feet above the five-year average of 3,609 billion. The figures thus combine inventories below last year’s level with a reading above the five-year historical benchmark. They come ahead of the start of the withdrawal season, as the agency said inventories above average provide additional supplies for winter heating needs.
In its outlook for November 2 to 8, the Climate Prediction Center of the National Oceanic and Atmospheric Administration said temperatures were likely to be above normal across most of the contiguous United States. The odds of above-normal temperatures exceeded 70% in parts of the Upper Mississippi Valley, Upper Great Lakes, Ohio Valley and Tennessee Valley. The map also includes areas of North, South and West Texas, as well as Ohio and Tennessee, in the above-normal temperature category. Such conditions could reduce near-term demand for gas used in heating during the forecast window, with the withdrawal season beginning on November 1. Weather forecasts provide a short-term framework for tracking demand, while storage levels remain a parallel factor in assessing available supplies.
The Energy Information Administration says stored gas provides a buffer against periods of increased consumption or lower production, but prolonged cold spells could push withdrawals above its projections. It also projected that heating degree days this winter would be nearly unchanged from last winter nationally and 1% below the average for the previous five winters. The agency links this outlook to the path of winter demand, while keeping the possibility of prolonged cold as a factor that could change the pace of withdrawals. Over a longer horizon, the administration expects the average spot price at the Henry Hub to reach $3.16 per million British thermal units in 2027, down 9% from 2026. It attributed much of the expected decline to higher prices in January 2026, when the average price reached $7.72 per million British thermal units after Winter Storm Fern.
In its production and export outlook, the Energy Information Administration projected U.S. dry natural gas production would rise from 112.20 billion cubic feet per day in 2026 to 116.13 billion in 2027. It also projected liquefied natural gas exports would increase from 17.6 billion cubic feet per day to 18.6 billion over the same period. The estimates put production and exports on an upward path in the agency’s outlook for next year. In the near term, traders are awaiting the storage report scheduled for October 29, ahead of the start of the heating season on November 1. The weekly storage reading will show how close the market is to the agency’s end-of-month inventory estimate of 3,850 billion cubic feet.