U.S. natural gas falls more than 4% to $2.51, lowest since October 2024

Key Facts

U.S. natural gas prices fell more than 4% to $2.51 per million British thermal units on October 26, their lowest level since October 2024, according to Trading Economics. The decline came amid forecasts for warmer-than-usual weather, reducing near-term need for gas used in heating. That kept domestic demand under pressure as the winter storage withdrawal season approaches. In contrast, production data showed a recovery during the previous week, while flows to export terminals were above the September average. The combination leaves prices caught between expectations of weaker domestic consumption and still-strong export supplies.

The U.S. Climate Prediction Center forecast above-normal temperatures across most of the United States over the next two weeks. The probability of temperatures exceeding the normal range was more than 70% in parts of the Upper Mississippi Valley, Upper Great Lakes, Ohio Valley, Tennessee Valley and parts of the Southeast. The outlook covers areas that include gas-producing and gas-consuming states, weakening near-term expectations for heating-related demand. In its November 2-8 outlook, the center kept temperatures weighted above normal in states including Texas, Ohio and Tennessee. The outlook is limited to the official forecast periods, but it delays signs of seasonal demand beginning in those areas.

Average gas production in the contiguous 48 states was about 113.3 billion cubic feet per day during the previous week, after recovering over that period. But average production since the start of October was 111.6 billion cubic feet per day, below the record 113.3 billion recorded in both August and September. The comparison shows that the weekly increase did not lift the monthly average to the late-summer peak. Meanwhile, average gas flows to the nine major U.S. liquefied natural gas export terminals rose to 18.2 billion cubic feet per day in October, from 17.9 billion in September. The increase supports continued withdrawals from supplies for export, even as expectations for domestic heating demand decline.

The Energy Information Administration said working gas in storage totaled 3,644 billion cubic feet in the week ended October 16, an increase of 77 billion cubic feet from the previous week. Still, inventories were 152 billion cubic feet below their level a year earlier and 35 billion above the five-year average of 3,609 billion. The reading puts inventories above their recent historical benchmark, but they remain below last year's level. The EIA estimated in its outlook issued on October 6 that inventories stood at 3,523 billion cubic feet at the end of September. It forecast an addition of 328 billion cubic feet during October, bringing inventories to 3,850 billion by the end of the month, 2% above the five-year average at the start of the heating season on November 1.

The EIA said inventories above average at the start of the withdrawal season provide additional supplies to meet winter heating demand. The withdrawal season typically runs from November through March, when the market relies on stored gas to meet heating consumption. The agency described this inventory level as support for supplies as the season begins, while warmer forecasts weigh on near-term demand. In the market, daily closing prices fell from $3.039 on October 19 to $2.64 on October 23, before the broader decline recorded on October 26. The move followed consecutive price declines during the previous week.

Available data show weather weighing on prices alongside a weekly recovery in production, while higher export flows temper the picture of weaker overall gas demand. Inventories above the five-year average add another factor to the supply balance ahead of the withdrawal season, despite remaining below their level a year earlier. The next weekly EIA storage report is scheduled for October 29. It will provide a more recent reading of the weekly change in inventories before the heating season begins on November 1. The Climate Prediction Center's outlook also covers November 2-8, a short window immediately after the season starts.