Natural gas futures slip as EIA forecasts 3,985 Bcf storage

Nymex natural gas futures settled down 1 percent at $2.767 per MMBtu as the EIA projected October storage at 3,985 Bcf.

The US Energy Information Administration expects inventories to end October at 3,985 billion cubic feet, the highest level entering winter since 2016 and 5 percent above the five-year average, according to its August Short-Term Energy Outlook.

Lower-48 dry gas production ran near 110 Bcf/d, up roughly 2 percent year-over-year, while LNG feedgas demand eased on maintenance at export terminals. Inventories for the week ended July 31 rose 33 Bcf, above the 30 Bcf consensus and the 23 Bcf five-year average, leaving stocks 6.7 percent above their seasonal norm.

The EIA sees Henry Hub spot prices holding below $3 per MMBtu until November, averaging $3.03 over the remaining five months of 2026, as near-record storage and strong output cap upside. The next weekly storage report lands Thursday at 10:30 a.m. ET.

Storage Swells to Decade-High Pre-Winter Cushion

The build reflects strong domestic production and reduced feedgas demand from maintenance at liquefied natural gas export facilities, including Freeport LNG. EIA Administrator Tristan Abbey said higher inventories during the fall would provide additional protection against rising heating-related gas consumption during winter.

US LNG exports are forecast to average 16.5 Bcf/d in the third quarter, slightly below the July projection, while Mexico's new Energia Costa Azul terminal and higher gas use for power generation support pipeline exports. Total US natural gas exports are expected to keep growing through 2027.

Henry Hub Forecast Cut 50 Cents

The EIA trimmed its third-quarter Henry Hub spot price forecast by 50 cents to $2.87 per MMBtu, reflecting reduced LNG demand, strong production and near-record storage. The agency raised its 2026 dry gas production forecast to 111.2 Bcf/d.

Active US natural gas drilling rigs fell three to 124 in the week ended Aug. 7, modestly below the three-year high of 134 set in February, according to Baker Hughes. The September contract touched a 52-week low of $2.483 earlier this month before a weather-driven rally.

The storage surplus and elevated output leave prices exposed to a mild shoulder season, when cooling load collapses before heating demand begins. A powerful El Niño winter forecast could further dampen heating demand, while the ramp-up of new LNG capacity through December — including Golden Pass and Corpus Christi Stage 3 — offers the main counterweight to the supply overhang.

This article is for informational purposes only and does not constitute investment advice.