Natural Gas Update October 16,2025

Overview

Natural Gas---November NG is unchanged at $3.016
NG spot futures are unchanged now after trying to rally overnight, with strong feedgas volume trying to offset the weak weather demand that has weighed on prices the past week or so. Comments seen suggest that market participants were less than eager to sell aggressively below $3 in the spot futures--even as technically momentum remains negative.

LNG feedgas volume rose on Wednesday to 17.20 BCF/d, which was within 0.05 BCF/d of the record, as per Celsius Energy data. The feed gas volume strength offset the weak weather demand that has weighed on the market of late.

Weather demand being weak is highlighted by the following forecast from Atmospheric G2 : "most of the US for October 20-24 will be above normal, as "there are still no signs of any noteworthy cold air intrusions and no appreciable cold air over Canada. Also, temperatures in the interior of North America are expected to remain warmer-than-normal for October 25-29."

The EIA natural gas storage data due out today is seen as a build of 78 to 81 BCF, as per the WSJ & Reuters surveys. This compares to last year's build of 77 BCF and the 5 year average build of 83 BCF.

We failed to mention yesterday that size traded in the December/January  -25/-20 cent call spread on Tuesday. 3,000 contracts traded at a cost of 1.1 cents to the buyer of the nearer call strike of -25 cents. These were positions that were initiated. The December January futures one month spread settled Tuesday at -33.3 cents.  Also initiated on Tuesday were positions in the December $3.00 and $2.50 puts. They traded in a 1 by 2 ratio. The $3.00 put was bought against selling of 2 of the $2.50 puts for a cost of 3.3 cents. 

In Wednesday's NG/LN options trading, a lot of March April 1 month calendar spread put options traded. The -10 cent put was purchased 6,000 times for 1.7 cents with the reference price for the underlying futures spread at the time being +8.0 cents. The March April +10 cent /flat/-10 cent put butterfly traded 4.8 cents cost to the buyer of the wings. And in February LN options, 3,500 lots of a Feb $4.00/$5.50 call spread traded with additional sales of the $3.40 put. The call spread buyer collected 1.4 cents in the options trade with .61 delta Feb futures sold at $3.79 to round out the trade. Additionally, the February/March one month CSO saw the $1.00 call sold with the 25 cent put bought at a cost of 5.9 cents. The November $3.00 put open interest on the CME fell by 9,475 contracts with Wednesday's activity. The $3.00 put was purchased at a price of 14.7 cents with .50 delta futures buys at $2.98 in one sequence. In another one, the $3.00 put was bought at 13.6 cents with .48 delta futures bought at $3.00.

NG futures open interest rose by 29,771 contracts in Wednesday's trading. The December through March contracts saw sizable increases, which given the pattern of selling seen during the 9 AM to 2:30 PM time, leads us to believe that the open interest is of mostly new short positions in that strip.

Technically, NG spot futures still have negative momentum. Wednesday's settlement in the spot futures was the 5th decline seen in the past 6 sessions. Yet, several comments we saw yesterday suggested that there may have been support below $3--as one trader said : "nobody's getting married to a position on the short side at sub-$3."  The support we had at 2.960-2.964 held with the low of 2.964 seen in Wednesday's trading. The gap to 2.944 thus remains unfilled. Below that support lies at 2.911-2.916. Some resistance in NG spot futures is seen at the overnight high at 3.062-3.065. Resistance to the upside above that lies at 3.130-3.138. 

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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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