That was a number buyers could work with on Thursday. It was not enough to keep them involved Friday.

Storage is still 1.3% above the five-year seasonal average, even though inventories are 4.1% below a year ago. The EIA still sees end-of-October storage reaching 3,985 Bcf, the highest level in 10 years and 5% above the five-year average.

Europe Is Still Supporting the Demand Side

European gas prices reached a 3.75-year high Friday. Storage was 74% full on October 14, well below the 89% five-year seasonal average.

U.S. LNG flows were 20.5 Bcf per day, up 6.2% from the prior week. That is still the bullish side of the trade.

Physical prices fell into the weekend outside the East. The market has European demand in front of it, but the weather trade is still winning at home.

LNG can keep the demand side from disappearing. It cannot create heating demand when the weather is not there.

Production Is Coming Back Into the Trade

Lower-48 dry gas production reached 113.9 Bcf per day Friday, up 5.0% from a year earlier, according to BNEF. Lower-48 gas demand was 71.5 Bcf per day, up 1.1% from a year earlier.

That production number is what makes the storage forecast hard to dismiss. The EIA raised its 2027 dry gas production estimate to 116.0 Bcf per day from 115.3 Bcf per day in July. Baker Hughes added one gas rig Friday, bringing the count to 133, just under the September 25 three-year high of 135.

The TCO outage gave the market a supply story Thursday. The expectation that the outage will be resolved Saturday gave traders less reason to carry that premium into the weekend.

What to Watch

The mild forecast gets the first vote when trading opens. Thursday’s smaller storage build, high European prices and strong LNG flows are still part of the bullish case. But the TCO repair, production at 113.9 Bcf per day and warm weather through month-end are the reasons buyers left Friday’s trade.

The November trend turned down after the break under $3.092. The two main tops at $3.334 and $3.395 leave the bias to the downside. The 50-day moving average at $3.068 held Friday’s low, but a sustained move under it puts the main bottoms between $2.912 and $2.896 back in front of the market.

December has the weaker chart after failing at its 50-day moving average. The current setup is bearish with December natural gas futures on the weak side of the 50-day moving average during a swing-chart downtrend. The $3.448 to $3.394 area is Monday’s first line. A recovery through the zone would ease the pressure. A break under it leaves $3.234 as the next major downside target.

More Information in our Economic Calendar.