The Energy Buyer's Guide | 11.04.2024
Natural gas prices turn back lower as persistent warmth expected into the second half of November.
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- Natural gas futures were sharply lower surrounding the November NYMEX contract expiration, with the Balance-of-Winter 2024-25 strip plunging to its lowest level since 2021
- Near-term temperature outlooks show limited energy demand deep into November in key markets in the Midwest and East
- Natural gas storage inventories now look poised to approach 4 Tcf based on expectations for net storage injections through at least the first two weeks of November
- Calendar 2025 power forwards were mostly lower last week, with indicative pricing for the first quarter plunging alongside winter natural gas futures
After a brief rally during the previous week, natural gas futures turned back to the downside last week, with steep losses posted through the upcoming winter season. The November 2024 NYMEX contract expired on Wednesday at $2.346 per MMBtu. This marked the lowest November expiry since 2015 and brought the average 2024 settlement to $2.164 per MMBtu. With 11 months in the books, 2024 is setting up to be the lowest NYMEX price environment since 2020 and the second lowest since 1998. The December 2024 through March 2025 strip was down by nearly $0.40 per MMBtu on the week and finished Friday at a multi-year low. Summer 2025 was down significantly, but to a lesser degree than nearby futures, as deliveries further out the curve saw only modest declines.
The return of bearish sentiment seems to have been primarily driven by near-term weather outlooks, which show lingering warmth persisting deep into November across key Midwest and East population centers. Market participants seem to be taking this as an indication of the overall winter season, even as longer-term outlooks are historically unreliable. As demonstrated the previous week, any colder shift in predictive weather models could lead to a quick knee-jerk reaction to the upside. However, last week ended with no hint of bullish temperature patterns at any point in at least the next two weeks. If this remains the case, the market will likely continue to shed risk premium as we progress deeper into November.
Also weighing on prices last week was increased domestic supply. Volumes were estimated above 101 Bcf per day for the first time since March, as it appears producers are ratcheting up output. Volumes are still short of year-ago levels, and it remains unclear whether production will show seasonal gains in line with the rapid jump leading into last winter that saw output surge to 105 Bcf per day.
