Last Week in Natural Gas
November natural gas shed 5.9% last week, sliding from $3.225 to a $3.035 Friday settle as mild autumn weather drained the pre-winter bid. Monday, September 28 did the most damage: with the October contract rolling off the board, November dropped 11.9 cents, or 3.7%, to $3.106, then gave up another 3.1% Tuesday. Thursday’s EIA release printed a +64 Bcf injection for the week ending September 25, effectively matching a +63 Bcf consensus estimate, above the 56 Bcf added in the same week last year but lighter than the usual five-year pace for late September. Total working gas reached 3,415 Bcf, 79 Bcf (2.4%) above the five-year average and 138 Bcf (3.9%) below year-ago. An in-line number gave bulls nothing to work with, and November settled at $2.967, below the $3.00 handle. Friday’s 2.3% bounce clawed back part of the damage but did not change the trend. The real driver sits in the Pacific: the ONI climbed to +2.16 for July-September, and the El Niño is forecast to peak in November-December at very strong levels, the classic setup for a mild northern-tier early winter.
The Week Ahead
The week turns on whether weather can defend the winter premium. Tuesday, October 6 brings EIA’s October Short-Term Energy Outlook, which will reset the end-October inventory and winter price paths against a strengthening El Niño. Thursday, October 8 delivers the EIA storage report for the week ending October 2. No published consensus is out yet, but September builds have run light, and another below-normal injection would stop the surplus to the five-year average from widening. NOAA’s monthly ENSO update lands the same day and should confirm the warming trend. The curve is the tension point: December stacks a steep contango premium over November, and January carries the richest price on the board, all priced for a normal winter that an El Niño split-flow pattern does not support. The offsets are real. LNG feedgas eased this week but terminals still run near capacity against European and Asian prices many times Henry Hub, production has stalled rather than grown, and a possible southwestern Gulf disturbance plus early polar-vortex weakening signals keep upside tails alive. Fade winter rallies without a confirmed cold shift, and respect support near $3.00.
In Plain English
Natural gas prices slipped about 6% last week as mild early-autumn weather kept heating demand low and the country kept adding gas to storage at a steady clip. Underground supplies are a little higher than normal for this time of year, though lower than a year ago. The bigger story is El Niño, a warming of Pacific Ocean waters that tends to bring milder winters to the northern United States. It is strengthening quickly, which could mean gentler heating bills this winter for households in the Midwest and Northeast. The main risks to that outlook are a sudden late-winter cold snap and strong overseas demand for American gas, which keeps export terminals busy and puts a floor under prices.