- Natural gas prices drop 6% to 2.81 USD/MMBtu amid a sharp weekly sell-off.
- Warm autumn weather forecasts lower heating demand across the United States.
- Extreme net short positions create potential for a sharp short squeeze on cold surprises.
- Natural gas prices drop 6% to 2.81 USD/MMBtu amid a sharp weekly sell-off.
- Warm autumn weather forecasts lower heating demand across the United States.
- Extreme net short positions create potential for a sharp short squeeze on cold surprises.
Natural gas prices (November contract) are falling today by 6%, down to around 2.81 USD/MMBtu. This is the lowest level in three weeks and a continuation of a sharp, double-digit weekly sell-off (-14.4%). After tomorrow's rollover to the December contract, prices will open lower, around 3.2 USD/MMBtu — the January contract, usually priced highest in the forward structure due to the peak of the heating season, is currently trading near 3.6 USD/MMBtu.
Warm autumn kills heating demand
The main pressure remains the weather. Commodity Weather Group forecasts above-normal temperatures across the eastern half of the US through November 3, and NOAA confirms a warm signal for the southern two-thirds of the country in the October 26–30 window and for most of the East Coast in the following week. In the background, the market is additionally spooked by the predicted "Super El Niño" phenomenon, which is expected to bring a milder winter than usual across the Northern Hemisphere.
On the supply side, pressure is eased slightly by a small dip in production (111.3 bcfd in October, down from a record 113.3 bcfd in August-September) and rising LNG exports (18.1 bcfd, up from September's 17.9 bcfd), but this is not enough to offset the scale of heating demand destruction.
Inventories: shrinking surplus, but still above normal
The latest EIA report (for the week ending October 9) showed a storage injection of 67 bcf, compared to 85 bcf previously. Inventories (3,567 bcf) remain 1.3% above the 5-year average, though 3.9% below last year's level. Tomorrow's EIA report will be key. The market needs a smaller injection and a cooler forecast to build even a short-term narrative of market tightening.
Positioning: record bearish
The latest CFTC report shows net short position of funds at -233,578 contracts, placing it at just the 1.3th percentile of the historical distribution. This extremely one-sided market setup creates the potential for a sharp short squeeze at the slightest cold surprise, but for now, this bearish positioning fully confirms the direction of the move.
Technicals: downward structure without ambiguity
Price is approaching the 2.80 USD level (23.6% Fibonacci retracement) and is trading 5.2% below the SMA50. RSI at 38 is nearing oversold territory, but MACD and moving averages remain clearly bearish. The nearest support lies at 2.70–2.75 USD, with a risk of dropping to 2.65 USD, and in a deeper sell-off scenario even to 2.50 USD. Resistance is located at the psychological 3.00 USD level and 3.15 USD (SMA50).
Daily Summary: SpaceX and the tech sector drive Wall Street, oil retreats sharply below $97
Russia is selling off gold reserves. Why, to whom, and does it matter for the market?
BREAKING: US oil inventories fall more than expected, but distillate build cools enthusiasm
US OPEN: Preparations for Tesla's mega-merger with SpaceX. Diplomatic stalemate with Iran cools Wall Street's enthusiasm