Is Rising U.S. Gas Production Creating a Supply Overhang?

Production growth continues to be a key headwind. U.S. (lower-48) dry gas output was estimated at 110.0 bcf/day on Friday, up 8.1% from a year ago. Baker Hughes reported an increase in active U.S. natural gas rigs, pushing the count to a 2.25-year high. The EIA recently raised its 2025 production forecast to 107.14 bcf/day, up 0.5% from the previous estimate, reinforcing the supply-heavy outlook.

Did the Latest Storage and Demand Data Offer Relief for Bulls?

Thursday’s EIA report did little to shift sentiment. The +33 bcf injection matched expectations but was below the five-year average build of +42 bcf, offering mild support. Still, inventories remain ample—up 0.4% year-over-year and 4.3% above the five-year seasonal average. Meanwhile, gas demand across the lower-48 dropped 2.7% year-over-year to 77.0 bcf/day, while LNG export flows edged down 0.8% week-over-week to 17.3 bcf/day, according to BNEF.

Are There Any Signs of Strength in Electricity Demand?

Electricity usage showed modest strength. Edison Electric Institute data revealed U.S. power output rose slightly by 0.05% year-over-year for the week ending November 1 and is up nearly 3% over the past year. While helpful, this uptick is unlikely to offset the bearish weight from strong supply and softening seasonal demand.

Short-Term Outlook: Bearish Bias Prevails