The near-term weather outlook continues to weigh on natural gas prices, with widespread above-normal temperatures expected to limit heating demand through the opening days of November. This bearish weather pattern has overshadowed an otherwise supportive fundamental backdrop, including robust LNG export demand and ten consecutive weeks of below-average storage injections. The longer-range forecast remains the biggest wildcard, as any shift toward colder temperatures could trigger a sharp reassessment of winter pricing following the recent selloff.

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• Prompt-month natural gas futures saw the steepest weekly decline since February, with November falling $0.48 per MMBtu and Winter 2026-27 slipping below $3.00 for the first time since 2021.

• The EIA reported a 77-Bcf storage injection, narrowing the surplus to the five-year average to just 35 Bcf, the smallest since March.

• LNG exports reached a new record high, averaging 20.6 Bcf per day, as new capacity continued to ramp at Golden Pass; domestic production rebounded back above 111 Bcf per day.

• Electricity demand declined sharply across much of the country, contributing to lower real-time power prices in most markets.

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Market participants are now largely discounting the impact of the recent stretch of relatively light storage builds. Instead, the focus has shifted almost entirely to the decidedly bearish weather outlook, which shows much warmer-than-normal temperatures through at least early November. Beyond that, forecasters are increasingly converging on expectations for an overall warmer-than-normal winter. While these forecasts remain subject to change, the market recognizes that a mild winter would leave inventories with a substantial cushion heading into next summer.

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The EIA reported a 77-Bcf storage injection this morning, marking the tenth consecutive week in which the build fell short of the five-year average. Over that stretch, the inventory surplus has narrowed from 198 Bcf to just 35 Bcf, while stocks are now 152 Bcf below year-ago levels.

Despite the continued tightening of the storage balance, weather remains the dominant influence on near-term market sentiment. Forecasts calling for widespread mild temperatures through the remainder of October and into early November are limiting expectations for heating demand and weighing on prices. With inventories still relatively comfortable heading into winter, the market appears willing to look past the recent string of below-average injections until colder weather provides a more meaningful catalyst for demand.

An archive of Daily Natural Gas Market Notes can be found here.

The EIA announced a 77-Bcf build this morning, marking the tenth consecutive week in which the injection fell shy of the five-year average. Over that stretch, the surplus has narrowed from 198 Bcf to just 35 Bcf, its slimmest level since March 20. The build also fell shy of the same week in 2025, when inventories increased by 86 Bcf. Stocks are now 152 Bcf behind year-ago levels, marking the widest deficit since July 2025.

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With the focus on the lack of any significant ramp in heating load in the two-week outlook, the selloff continued even as the market is anticipating another below-average storage injection in Thursday’s EIA report. Analysts are forecasting a 77 Bcf build for the week ended October 16, compared to the five-year average of 87 Bcf. If realized, it would mark the tenth consecutive below-average injection and narrow the storage surplus to just 35 Bcf, leaving inventories nearly in line with historical norms heading into the winter heating season.

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Falling weather-related demand and recovering production have weighed on futures prices since last week, even as LNG feedgas volumes reach record highs. With Cove Point returning from seasonal maintenance and Golden Pass ramping up Train 1 toward full capacity, overall feedgas demand has recently reached 21 Bcf per day for the first time. However, this comes amid forecasts for continued mild weather and general expectations of a tame heating season, which are helping to maintain downward pressure on natural gas futures heading into winter.

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The continued weakness in nearby prices suggests that traders remain comfortable with the near-term supply outlook as the market moves deeper into the fall shoulder season. Mild weather and limited heating demand have weighed on sentiment, despite the recent tightening in storage inventories. With expectations for temperatures to remain bearish into at least early November, storage inventories could play catch up in the weeks to come.

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• Natural gas futures reversed lower after a midweek rally, with November declining $0.10 per MMBtu and Winter 2026-27 falling $0.16.

• The EIA reported a 67-Bcf storage injection, narrowing the surplus to the five-year average to just 45 Bcf, the smallest since March.

• LNG exports climbed to 19.6 Bcf per day as domestic production declined, although weaker power generation demand led to a looser overall balance.

• Electricity demand rebounded across the eastern and central U.S., prompting a PJM Maximum Generation Emergency, while sharply cooler western weather drove California loads lower.

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Friday’s selloff followed an update from Columbia Gas Transmission indicating that service on the Mountaineer XPress pipeline is expected to resume Saturday, October 17, following Wednesday’s force majeure declaration. The outage restricted approximately 1.9 million Dth per day of transportation capacity, but the prospect of a relatively short disruption has eased concerns about a prolonged reduction in Appalachian production. Meanwhile, Thursday’s EIA storage report showed a smaller-than-expected 67 Bcf injection, narrowing the inventory surplus to just 45 Bcf relative to the five-year average.

Despite this increasingly supportive storage picture, forecasts favoring above-normal temperatures across much of the eastern U.S. continue to weigh on expectations for early-season heating demand, limiting the market’s ability to sustain recent gains.

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The front end of the forward curve was bolstered by the EIA’s Weekly Natural Gas Storage Report (Link), which showed a smaller-than-expected build into underground inventories for the week ending October 9. Additionally, the Force Majeure on the TCO pipeline that was announced yesterday appears to be impacting production volumes based on daily estimates derived from pipeline nominations.

The market seems to be looking beyond the temporary tightening of the supply/demand balance however, choosing to focus on near-term weather forecasts. The current 6-10 and 8-14 day outlooks from the National Weather Service (below) show above-normal temperatures are expected for the eastern half of the U.S. through the end of October. With every day that passes, temperature forecast maps that look like those below will carry an increasingly bearish impact as they suggest a sluggish start to the heating season and below-normal natural gas demand.

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Today’s reported 67-Bcf build in natural gas storage inventories fell below market expectations and was 18 Bcf below last week’s build. This marks the ninth consecutive storage injection that lagged the 5-year average, a continued erosion of the surplus to the widely-followed 5-year average benchmark from 198 Bcf for the week ending August 7 to just 45 Bcf for this report week.

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Columbia Gas Transmission declared force majeure following the discovery of a leak on the Mountaineer XPress pipeline in West Virginia, near the same location as an unexpected outage in September. The affected segment carries approximately 1.9 million Dth per day, and scheduled flows will be reduced to zero beginning immediately. The operator stated that the new leak is unrelated to the previous incident, but the sharp price response suggests market participants may be concerned about a more prolonged disruption this time around.

Total U.S. natural gas production declined by approximately 1.5 Bcf per day during the September outage, when overall output was running higher than current levels. A similar reduction from the recent baseline could bring production below 109 Bcf per day. A prolonged disruption would reduce the volume of gas available for storage injections ahead of winter, representing a bullish development for the market.

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A confluence of near-term bullish factors seems to be driving recent market sentiment. Production volumes remain muted below 110 Bcf per day as producers continue to respond to extremely low cash pricing in the East by throttling output. The market is also bracing for another relatively light storage injection on Thursday, with the surplus to the five-year average likely to continue contracting. Additionally, a brief cold snap is expected over the upcoming weekend, leading to a period of elevated residential and commercial demand.

However, the forecast beyond the next six days is decidedly bearish, with mild temperatures expected for the balance of October and into early November. As these conditions materialize, it will be interesting to see whether the recent rally can be sustained.

An archive of Daily Natural Gas Market Notes can be found here.

• Natural gas futures rallied last week, with November and Winter 2026-27 both gaining $0.19 per MMBtu amid temporary supply disruptions and continued tightening in storage comparisons.

• The EIA reported an 85-Bcf storage injection, narrowing the surplus to the five-year average for the eighth consecutive week to just 68 Bcf.

• Economic shut-ins in Appalachia and hurricane-related outages in the Gulf pushed domestic production lower late in the week.

• Exceptional heat across the West drove a sharp increase in CAISO electricity demand, while loads declined across the other major power markets.

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This week is expected to bring a significant shift in temperature patterns. Much warmer-than-normal weather is forecast across key areas of the Midwest and East in the coming days, but cooler-than-normal conditions are expected to develop in these regions by the weekend. While this unseasonable cold is expected to be short-lived, any forecast changes suggesting a more sustained period of sustained, meaningful cold during the second half of October would likely get the market’s attention.

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Natural gas futures have seen renewed volatility as temporary supply disruptions collide with weakening seasonal demand. Appalachian production shut-ins and hurricane-related outages in the Gulf have lent support to prices, even as the market enters a period of relatively mild weather and limited heating demand. With storage levels healthy heading into winter and seasonal forecasts leaning mild, the broader fundamental outlook remains largely neutral to bearish.

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Early support came from a modest disruption to offshore natural gas production in the Gulf associated with the approaching hurricane, although the supply impact appears relatively limited.

This morning’s EIA storage report showed an 85-Bcf injection for the week ending October 2, the largest weekly build since late June. While the injection exceeded the comparable build from 2025, it fell short of the five-year average of 96 Bcf, narrowing the surplus to that benchmark for the eighth consecutive week. Inventories now stand just 68 Bcf above the five-year average, the smallest cushion since March, while the deficit to year-ago levels narrowed to 130 Bcf. Although the continued erosion of the storage surplus has provided some underlying support to prices, the market’s inability to sustain Thursday’s early rally suggests that concerns over comfortable inventories and a relatively mild start to the heating season continue to temper bullish momentum.

The recent strength has been driven largely by near-term production disruptions. Weak cash prices in Appalachia have prompted producers to curtail output, while hurricane-related shut-ins in the Gulf of Mexico have temporarily tightened supply further. However, these factors should prove short-lived, and weather forecasts are pointing toward mild conditions through much of late October. Meanwhile, yesterday’s 85-Bcf storage injection reinforced expectations for healthy inventories heading into winter, even as the surplus to the five-year average continues to narrow. With the heating season still several weeks away, the market may struggle to sustain its recent momentum without a colder turn in the forecast.

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This morning’s announced 85-Bcf storage injection marked the largest build since the week ended June 26 as the pace of storage additions continued to accelerate. However, the injection still fell short of the five-year average of 96 Bcf for the same week, narrowing the surplus for the eighth consecutive week. At 68 Bcf, the cushion above the five-year average is now the smallest since March. This marked the second consecutive report to show a larger injection than the corresponding week in 2025, narrowing the deficit to year-ago levels to 130 Bcf after that gap expanded to 146 Bcf in mid-September.

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Lingering early-October heat and a recent pullback in domestic production have provided support to the market. Production has softened as weak cash pricing in parts of the East has discouraged output, tightening near-term balances at a time when weather-driven demand remains stronger than normal for the season. Still, the broader outlook remains relatively benign. Medium-term forecasts continue to point toward mild conditions across much of the country into the opening stretch of heating season, limiting the urgency behind the recent rally.

An archive of Daily Natural Gas Market Notes can be found here.