Wednesday’s high came before the number. A build near 73 Bcf gives buyers another shot at the market. A print near 77 Bcf leaves room for the sellers who hit the market late Wednesday.

Warm Weather Comes Back Next Week

Highs in the 80s and 90s are running from East Texas to the Mid-Atlantic Coast Thursday. A cold system is crossing the Midwest with highs in the 40s and 50s. It reaches the Great Lakes and Northeast this weekend, with lows in the teens to 30s.

NatGasWeather sees moderate demand from Friday through Sunday, then low demand next week. The Commodity Weather Group sees above-average temperatures spreading across the central third of the country from October 19 through October 23.

The cold is in the forecast. So is the warmth behind it.

LNG and TCO Are Holding the Bullish Side Together

Estimated LNG net flows to U.S. export terminals were 19.7 Bcf per day Wednesday, up 9.6% from the prior week, according to BNEF. European gas storage was 74% full as of October 12, compared with the five-year seasonal average of 89%.

The TCO pipeline outage has also put future storage builds back on the board. LNG demand, lower European storage and the outage are the three supply-side issues traders are carrying into the EIA report.

Lower-48 dry gas production was 111.2 Bcf per day Wednesday, up 2.9% from a year ago, according to BNEF. Lower-48 gas demand was 72.7 Bcf per day, up 3.8% from a year ago.

Production Is Not Getting Out of the Way

LNG is making the dips harder to sell, but the market is not short gas. The EIA still sees end-of-October storage at 3,985 Bcf, the highest level in 10 years and 5% above the five-year average. It also raised its 2027 dry gas production forecast to 116.0 Bcf per day from 115.3 Bcf per day.

Last week’s 85 Bcf build was a little above the 82 Bcf estimate, but still below the five-year average of 96 Bcf. Inventories are 2.0% above the seasonal average and 3.9% below last year. That is not a supply squeeze.

Baker Hughes took one gas rig out of the count, leaving 132. That is down from 135 two weeks ago. Meanwhile, Lower-48 output is running at 111.2 Bcf per day. One rig is not going to change that story.

What to Watch

The storage report is the first real answer after Wednesday’s break. A light injection gives the buyers another reason to stay with LNG demand and the TCO outage. A larger build brings the warm weather trade right back into the market. Next week is the harder problem. Demand fades, the central United States stays warm and production remains heavy.

Wednesday’s reversal top is still sitting on the chart. The main trend held up, but buyers have to take out Wednesday’s high to dismiss the reversal. Sellers need a break under Wednesday’s low to prove it. Until then, neither side has finished the job.

More Information in our Economic Calendar.