Natural gas retreats from $3.70 as traders await EIA storage data

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Natural gas faces a critical test

Mixed weather forecasts raise doubts about winter demand

The main reason for today's caution among market participants is conflicting weather forecasts. Expected colder weather in the eastern and central U.S. states continues to support natural gas demand, but the latest weather models indicate a return to above-normal temperatures in several regions during the second half of November.

According to LSEG estimates, total gas demand across the 48 contiguous U.S. states, including exports, could increase from approximately 114.8 billion cubic feet per day this week to 124.1 billion next week. Meanwhile, the updated EIA forecast suggests that heating degree days in November will be 13% below the 10-year average.

Thus, a short-term cold spell could temporarily increase consumption but does not yet guarantee sustained demand growth throughout the heating season. This uncertainty is contributing to profit-taking after the recent price increase, which was also supported by short covering among speculators whose aggregate net short positions had previously reached their highest level since March 2020.

U.S. output and LNG flows shape the supply outlook

High U.S. production remains a limiting factor despite a slight decline in recent weeks. According to LSEG, average daily natural gas production in November stands at approximately 112.4 billion cubic feet, compared with 113.4 billion in October and a record 115 billion in August. The American Gas Association also notes that production declined by 0.7% in the week ending November 12 but remains 2.5% above last year's level.

At the same time, LNG exports continue to absorb a significant share of domestic supply. According to Rystad Energy, gas flows to U.S. export terminals reached a record 20.3 billion cubic feet per day on November 7 and stood at approximately 19.6 billion on November 11. Higher utilization at Golden Pass, the resumption of deliveries following maintenance at Freeport, and the start of commercial operations at the first phase of Plaquemines LNG support export demand. However, expanding domestic production helps partially offset additional consumption by export facilities, so higher LNG shipments do not yet provide clear grounds for a prolonged gas shortage.

NATGAS could test $3.45 as inventory figures approach

The main event on November 13 will be the release of the weekly EIA natural gas storage report, postponed from Thursday to Friday due to Veterans Day. According to the previous report, U.S. natural gas inventories increased by 77 billion cubic feet in the week ended October 30, reaching 3.801 trillion cubic feet. This figure is 2.8% below last year's level but 1.4% above the five-year average.

Ahead of the report, moderate profit-taking on long positions in NATGAS is possible, with prices, as noted in Natural gas extends gains as colder weather forecasts boost demand, potentially declining toward $3.50–3.45. The report itself could determine the market's next direction, with an increase in inventories potentially putting pressure on prices, while a decline could provide support.

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