Natural Gas News: Pipeline Premium Fades as November Breaks 50-Day Moving Average
The EIA projects end-of-October storage near 3,985 bcf, the highest in a decade and 5% above the five-year average. The EIA also raised its 2027 dry natural gas production forecast to 116.0 bcf per day from 115.3 bcf per day. Baker Hughes reported that active natural gas rigs rose by one to 135, a new three-year high.
Lower-48 dry gas production was 110.6 bcf per day Friday, down 0.5% from a year ago according to BNEF. Demand was 69.0 bcf per day, down 7.9% from a year earlier. LNG net flows to U.S. export terminals were 18.5 bcf per day, down 1.6% from the prior week.
Europe Is Tight but China Is Not Bidding
EU gas storage is about 71% full against an 87% five-year seasonal average. Germany is just above 57%. QatarEnergy has extended force majeure on LNG supplies to Italy’s Edison through December. The Strait of Hormuz is still part of the global LNG trade.
China is the offset. September LNG deliveries were forecast near 5.3 million tons, about 8% below a year ago. European gas prices fell toward €71 per megawatt-hour, the lowest in a month. The tightness in Europe is real. It is not pulling enough on the U.S. front month to offset weak domestic demand.
The Edison Electric Institute reported lower-48 electricity output rose 16.1% from a year earlier to 94,427 gigawatt hours in the week ended September 12. The power numbers are the strongest demand figure in the report. They have not been enough.
What to Watch
Thursday’s EIA report is the next number November natural gas futures have to trade. The pipeline repair removed the outage premium. The weather runs turned milder. The contract is sitting under the 50-day at $3.041 after failing to hold the $3.087 retracement level Tuesday afternoon.
The main trend is still up on the daily swing chart. That lasts until $2.976 goes. Sellers pushed the market through the retracement zone and the average on the same session. Buyers reached $3.156 on Tuesday’s bounce and got sold. The rig count at a three-year high and end-of-October storage projected at the highest level in a decade are not giving the long side much room to work with heading into Thursday’s report.
More Information in our Economic Calendar.