Natural Gas News: EIA Data Expected to Show High Inventory; Market Awaits Impact

Natural Gas Futures Slide on Warmer Weather and Hefty Storage Build Projections

U.S. natural gas futures are trending lower on Thursday, with prices hitting a new low for October in the early session, reaching levels not seen since late August. This drop in futures is fueled by bearish weather forecasts, weak energy sector performance, and elevated storage expectations.

Milder Weather Suppresses Demand

A major factor impacting prices this week is a shift in U.S. weather forecasts that project warmer-than-normal conditions, limiting heating demand through the first half of November. According to NatGasWeather, the American weather model recently reduced its heating degree day (HDD) forecast by 11 degrees, indicating decreased demand for natural gas. The European model also supports this warmer trend, showing November HDDs significantly below seasonal norms. The reduced heating demand, combined with unseasonably mild conditions across much of the U.S., suggests limited need for natural gas in the near term, weakening market sentiment.

From October 31 through November 6, weather systems are expected to bring cooler temperatures across parts of the western and central U.S., with highs ranging between the 40s and 60s Fahrenheit. Meanwhile, the southern and eastern U.S. will experience milder weather with highs in the 60s to 80s, and occasional peaks in the 90s in isolated areas. These conditions contribute to an overall light demand profile for natural gas this week.

Anticipated Storage Report Adds Bearish Pressure

The U.S. Energy Information Administration’s (EIA) weekly natural gas storage report, due later Thursday, is also expected to pressure prices downward. Analysts expect a substantial inventory build, with estimates clustered around an 84 billion cubic feet (Bcf) injection. This projection significantly exceeds the five-year average build of 67 Bcf, underscoring a supply surplus amid mild weather that limited consumption in recent days.

If the EIA confirms a build near 84 Bcf, it would mark a notable increase, pointing to ample supply levels as the market heads into the winter season. With production steady and wind energy contributing robustly to electricity generation, less natural gas is currently needed to meet power demands. The market outlook remains sensitive to inventory levels, with larger-than-average injections creating a bearish outlook as they continue to weigh on prices.

Market Forecast: Bearish Outlook

Given the warmer weather outlook, lighter-than-normal demand, and anticipated storage injection above seasonal norms, the short-term outlook for U.S. natural gas prices remains bearish. Unless colder weather patterns emerge, price recovery may be limited in the near term as supply continues to outpace demand. Traders should monitor upcoming weather model updates and next week’s EIA storage data closely, as any significant deviations from current forecasts could drive volatility in either direction.