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- Natural Gas Update October 1,2025
Overview
Natural Gas--NG is up 7.8 cents at 3.381
NG futures are higher with commentaries offering different reasons for the strength. One cites strong LNG export demand, while another cites a dip in gas production this week. Another cites strength in cash pricing. We wonder if some of the rally is about perceived winter strength and hence long positioning, given the recent increase in open interest in NG futures.
Celsius Energy said Tuesday that LNG export demand came in at 16.15 BCF/d, up +5.0 BCF/d versus last year. This is the largest year-over-year gain since July & essentially cancels out the year-over-year gain in production.
U.S. domestic natural gas production is estimated down to 107.5 BCF/d today compared to just over 109 BCF/d at the start of the week, according to Bloomberg data. Production averaged 108.8 BCF/d over the previous week.
Next day Henry Hub cash was seen at 3.130-3.150 yesterday mid-morning. This was up 20 cents from Monday's pricing. The cash futures differential narrowed Tuesday to 15 cents, down from the 34- 36 cent differential seen in the prior session.
The NG futures open interest rose strongly again in Tuesday's CME data. We suspect that again new length was added in the winter strip. Open interest rose by over 15,000 contracts, as it did on Monday.
We wish to add the notion that some of the rally seen this week could be related to OPEC+'s possible production increase and the possible attempt by the Saudis to regain market share. If the Saudis succeed at crowding out the U.S. producers and as a result U.S. oil production declines, then associated natural gas production would likely fall, thus supporting NG prices to some extent.
The TTF spot natural gas futures have fallen today to their lowest value in 6 weeks as strong storage injections ease winter concerns. Inventories in France and Italy stand above 90%. Lower LNG demand in Asia, due to milder cooling needs, has freed up supplies for Europe, supporting the price drop. (Trading Economics) The low for the November spot TTF futures today is Euro 30.735. This is near to the low seen August 18 of Euro 30.300. The one supportive element for the TTF futures today is the fact that the contract is testing the DC chart's lower bollinger band, which intersects at 31.391.
In the LN/NG options on Tuesday, the October 2026 $2.60/$2.25 put spread traded in a 1 by 2 ratio with the $2.60 put being sold and the $2.25 bought for a net cost of 0.5 cents. The trade was initiated given the open interest increases seen in those strikes in CME data. The April/October 6 month CSO 50 cent put traded 10.2 cents in an initiating trade. The April October futures spread settled Tuesday at 43.9 cents. The contract low for the spread is 49.6 cents. The November $3.00 put open interest rose by nearly 5,000 contracts. Among trades seen in that strike was a purchase of the November $3.00 put with .24 delta futures bought at $3.31.
Momentum remains positive, as the spot futures almost tested resistance at 3.398-3.401 with an overnight high of 3.396. Resistance above that comes in at 3.469-3.475. Support is seen at 3.287-3.293 and then at 3.245. The one drawback is that the spot futures continue to bump up against the DC chart's upper bollinger band. That band lies at 3.352.
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This article and its contents are provided for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.
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