Natural gas faces the markets today with storage above the 5-year average but below last year. A new EIA price outlook and a weather forecast point to warmth across much of the central and northern United States next week.
Storage Reports Remain Steady
The latest storage readings are from EIA’s November 5 report ending October 30. Working gas in the Lower 48 stood at 3,801 billion cubic feet after an injection of 77 billion cubic feet. Stocks were 109 billion cubic feet, or 2.8%, below the year-earlier level, but 54 billion cubic feet, or 1.4%, above the 5-year average.
The headline is a little more complicated than it appears, though. Regional balances are somewhat mixed, with the East adding 13 billion cubic feet to 926 billion cubic feet and the Midwest adding 23 billion cubic feet to 1,111 billion cubic feet. South Central stocks rose 40 billion cubic feet to 1,208 billion cubic feet, but remained 6.6% below the same week last year and 1.1% below the 5-year average.
South Central includes storage near Gulf Coast supply and liquefied natural gas export infrastructure, so a regional deficit can matter even while the national total is slightly above normal, as it can have an influence on exports itself.
Natural Gas Price Forecast
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The November 10 Short-Term Energy Outlook from the EIA lowered its Henry Hub annual average forecast to $3.37 per million BTU for this year and $2.88 for next year, from $3.48 and $3.16 in its previous forecast. These are projections, obviously, and not actual pricing, but do make for background information. EIA’s November forecast expects U.S. LNG exports to increase from 17.6 billion cubic feet per day in 2026 to 19 billion cubic feet per day next year, while domestic natural gas’ share of power generation is expected at 40% this year and 39% next year.
Weather Is Starting to Turn Cooler in Some Larger Population Areas
NOAA’s Climate Prediction Center discussion yesterday favors above-normal temperatures across much of the central and northern U.S. during November 16-20, with probabilities above 80% in parts of the Northern Plains and Upper Mississippi Valley. It favors cooler-than-normal conditions across parts of the West and some coastal southern Mid-Atlantic and southeastern areas.
This is the probabilistic 6-10 day outlook, not an actual daily temperature forecast, but again adds background information. Weather is starting to turn cooler in some larger population areas, thereby adding to the mix of confusion.
The next storage report from the EIA is scheduled for tomorrow and will cover the week ending November 6. It will ask questions of the injection pace, whether or not it continued after the 77 billion cubic feet build.
The fundamental picture is somewhat balanced. Natural gas stocks are slightly above normal and forecasts are warm in key regions, but inventories trailed last year, and South Central, one of the more important areas, remains below its seasonal benchmark. Colder weather could send this market flying.
Buyers Looking to Take Control above $3.30
The technical outlook right now is fairly strong. It appears that natural gas is doing everything it can to break through the $3.30 level, but still continues to see selling pressure. At this point, I look at natural gas as a buy-the-dip scenario.
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