U.S. natural gas futures dropped about 3% on Friday, reaching a two-month low as milder-than-expected weather forecasts reduced anticipated heating demand. Front-month November futures on the New York Mercantile Exchange fell 7 cents to $2.726 per MMBtu, marking the lowest close since August 17 and a weekly decline of roughly 13%.
Calendar 2027 futures hit an almost five-year low of $3.09 per MMBtu, while the 12-month strip fell to a two-year low of $2.90. These declines suggest the market is not concerned about supply meeting demand in the coming months. Meteorologists predict mostly milder-than-normal weather across the country through November 7, which should keep heating demand low in the near term.
Average gas output in the Lower 48 states slipped to 111.6 billion cubic feet per day (Bcf/d) so far in October, down from record highs of 113.3 Bcf/d in August and September. However, daily output has recovered to about 113.3 Bcf/d over the past week. The U.S. storage surplus has narrowed after a hot summer forced energy firms to draw heavily on inventories to fuel power plants.
Analysts estimate gas in storage fell to 0.7% above the five-year average during the week ended October 23, down from 1.0% the prior week. LSEG forecast average demand in the Lower 48, including exports, would rise from 106.7 Bcf/d this week to 107.3 Bcf/d next week and 112.5 Bcf/d in two weeks as seasonally colder weather arrives.
Average gas flows to the nine major U.S. LNG export plants rose to 18.2 Bcf/d so far in October, up from 17.9 Bcf/d in September but below the monthly record of 18.8 Bcf/d set in April.