Bearish Trend Builds in Natural Gas Market as Shoulder Season Cuts Demand
Natural gas prices are experiencing a bearish trend as the shoulder season begins to cut demand. The Energy Information Administration reported a storage build of 40 Bcf, which was smaller than the five-year average injection of 52 Bcf. However, traders were expecting a tighter number and got the opposite. This bearish storage print landed on a market that was already selling.
The shoulder season is taking away the weather bid as cooler late-September weather is expected to reduce power-sector demand. The futures market has been pricing this transition since Tuesday, and Friday's failed bounce is another session where the near-term heat could not overcome the forward demand picture.
Despite record production levels, with the EIA expecting U.S. dry natural gas production to average a record 111.7 Bcf per day in 2026, the market still has enough supply to rebuild inventories even with LNG exports running at elevated levels. Working gas inventories are expected to be about 5% above the previous five-year average heading into the winter withdrawal season.
LNG feedgas is running near 19.7 Bcf per day, which is a counterweight to the bearish trend. European prices are elevated and Middle East disruptions are keeping the overseas market tight, making U.S. futures fall despite this demand.