October Nymex natural gas (NGV26) on Friday closed up +0.062 (+2.13%).

Nat-gas prices settled higher on Friday but remained below Thursday’s 1.75-month nearest-futures high.  Nat-gas prices rose on Friday as US weather forecasts shifted to hotter for mid-September, potentially boosting nat-gas demand from electricity providers as air-conditioning use increases. According to weather forecaster Vaisala, forecasts shifted warmer across the western half of the US for September 9-13 and trended slightly hotter across the central and southern US for September 14-18. 

US (lower-48) dry gas production on Friday was 114.3 bcf/day (+5.1% y/y), according to BNEF.  Lower-48 state gas demand on Friday was 80.6 bcf/day (+7.3% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Friday were 19.1 bcf/day (-1.8% w/w), according to BNEF.

As a positive factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended August 29 rose +12.56% y/y to 96,357 GWh (gigawatt hours).  Also, US electricity output in the 52 weeks ending August 29 rose +2.63% y/y to 4,375,966 GWh.

As a bearish factor, the US Energy Information Administration (EIA) on August 11 projected that US nat-gas storage levels will swell to 3,985 bcf at the end of October, the highest level in 10 years and 5% above the five-year average.  On Monday, the EIA raised its 2027 US dry natural gas production estimate to 116.0 bcf/day from 115.3 bcf/day projected in July.

A bearish medium-term factor for nat-gas prices is speculation that a powerful El Niño weather system will bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, reducing nat-gas heating demand. 

Thursday’s weekly EIA report supported nat-gas prices, showing a +30 bcf increase in US nat-gas inventories for the week ended August 28, below expectations of +33 bcf and below the 5-year weekly average of +37 bcf.  As of August 28, nat-gas inventories were down -1.8% y/y and +5.2% above their 5-year seasonal average, signaling adequate nat-gas supplies.  As of September 2, gas storage in Europe was 66% full, compared to the 5-year seasonal average of 83% full for this time of year.

Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ended September 4 fell by -2 to 130 rigs, just below the 3-year high of 134 rigs set in February 2026.