Natural Gas Update October 21,2025

Overview

Natural Gas --November NG is up 2.5 cents at 3.422
NG spot futures are up slightly continuing Monday's sharp rally.  A colder weather pattern than previously forecast has been the catalyst for the rally.  The November contract is again today performing better than the rest of the contracts in NG, as it did Monday.

On Monday, LSEG projected average gas demand in the Lower 48 states, including exports, would rise from 101.5 BCF/d this week to 105.5 BCF/d next week. These forecasts were up a total of 3.4 BCF/d from those issued Friday.

Forecaster Atmospheric G2 said Monday that forecasts shifted colder across the northeastern and central regions of the US for October 25-29 and shifted cooler over the eastern two-thirds of the country for October 30 to November 3. 

Early estimates for the gas storage data from the EIA for this week's release are for a build of 74 to 81 BCF. That compares to last year's build of 79 BCF and the 5 year average build of 77 BCF.

In the LN/NG options on Monday the November/December minus 55 cents call open interest rose by 8,000 contracts. The call traded 2.7 cents in size. 

Some of Monday's rally was also about short covering, evidenced by the drop in November futures open interest of 21,644 contracts. November futures rose by 12.93% basis the settlement Monday. The 2 days rise seen Friday and Monday in spot futures is the largest dollar gain seen since March 4th and the largest percentage gain seen since October 30,2024. November futures settled up Monday by 38.9 cents, while the rest of the winter strip settled up 19.7 to 29.4 cents.

U.S. natural gas pipeline exports to Mexico averaged 7.5 BCF/d in May 2025, the most of any month on record as Mexico’s demand for natural gas increases, the EIA said on Monday. Several factors have contributed to the increase. Increased electric power demand, limited gas storage and new pipelines having been commissioned in recent years. (Reuters)  In August, NGI reported that traders should expect continued strength in Mexico’s demand for US natural gas for the remainder of 2025 and into 2026 as output stalls at Mexico’s state-owned Pemex.  Export flows to Mexico are estimated today at 6.76 BCF/d compared to the 30-day average of 6.97 BCF/d, Bloomberg data shows.

Technically the rally Monday and today has seen momentum turn positive basis the DC chart. Upside resistance lies at at the overnight high at 3.499-3.504 and then at 3.540-3.550. Support lies at 3.351-3.355 and then at 3.293-3.296.

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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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