Natural Gas Price Rally
Hotter Weather Forecasts Lift Near-Term Natural Gas Futures Amid Strong Production Levels
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Key Points
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Lower-48 dry-gas production was 112.2 billion cubic feet per day, up 3.1% from a year earlier, while demand reached 74.6 billion cubic feet per day, up 0.3%, indicating that stronger output is offsetting much of the demand increase.
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NG Energy’s Sinú-9 production had approximately doubled relative to its quarterly average by early August, and the company’s shares rose 5.66% on Sept. 21; however, no company announcement was identified that independently explained the full daily gain.
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NG Energy’s financial position improved after the Sinú-9 strategic transaction, warrant exercises and lower borrowing costs, giving the company additional flexibility to pursue its Colombian expansion program.
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Gazprom said the second phase of its small-scale LNG complex in Russia’s Amur Region is nearing completion; commissioning it will double the facility’s capacity to 25,200 metric tons per year, with the additional output intended for regional demand.
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October 2026 natural-gas futures on NYMEX increased 0.28% to $2.84 per million British thermal units.
Natural gas futures are climbing on forecasts for hotter weather that will drive near-term demand, with October contracts gaining ground. Natural Gas Intelligence reported that prices are clinging near $3 per million British thermal units, though traders remain skeptical that a sustained winter shortage is building. Strong domestic production—up 3.1% year-over-year to 112.2 billion cubic feet per day—is offsetting much of the demand lift, limiting how high prices can climb.
The rally in front-month contracts masks weakness in later-dated futures, which have lagged behind. FX Empire noted that expectations of a shrinking U.S. gas storage surplus have fueled the near-term rally, but inventories remain ample and production stays robust enough to cap upside pressure.
Heat Wave Boosts October Demand, But Production Keeps Pace
Hotter weather forecasts are driving natural gas demand higher in October, as cooling needs spike. Demand reached 74.6 billion cubic feet per day, up just 0.3% year-over-year, a modest gain that shows the weather bump is real but modest. However, Lower-48 dry-gas production surged to 112.2 billion cubic feet per day, a 3.1% increase from last year. This supply-demand math matters: abundant production is eating into any price gains that higher demand would otherwise create.
NASDAQ reported that prices have rallied to 2.5-month highs on expectations that the U.S. gas storage surplus would shrink. Yet storage levels remain well-supplied, meaning the heat wave alone won't trigger the sustained shortage that would send prices soaring. Traders are watching whether winter demand will be strong enough to tighten supplies into early 2026.
Colombia's NG Energy Doubles Sinú-9 Output, Eyes Pipeline Expansion
NG Energy's Colombian production is accelerating, with output from the Sinú-9 block roughly doubling its quarterly average by early August. The company's stock jumped 5.66% on September 21, reflecting investor confidence in the expansion. Financial improvements—including proceeds from a strategic transaction, warrant exercises, and lower borrowing costs—have given NG Energy more room to fund its Colombian growth plan.
The catch: Sinú-9 is bumping up against the capacity limits of existing export pipelines. A planned pipeline expansion is now critical to unlock further production gains from both Sinú-9 and the Maria Conchita block. Without this infrastructure upgrade, the company's growth will plateau, making the pipeline project a make-or-break investment for the next phase of Colombian output.
Russia's Gazprom Eyes Global LNG Surge, Expands Arctic Capacity
Gazprom projects that global LNG demand could exceed 900 billion cubic meters by 2035, driven primarily by China and India. The forecast underscores how emerging markets are reshaping global gas flows, with Asian demand outpacing traditional Atlantic basin growth. Russia is positioning itself to capture this growth, though Western sanctions limit its ability to invest in large-scale LNG projects.
To serve regional demand, Gazprom's small-scale LNG complex in Russia's Amur Region is nearing completion of its second phase. Once commissioned, the facility will double capacity to 25,200 metric tons per year. Russian domestic LNG sales for vehicle fuel and off-grid supply surged nearly 25% in 2025, showing strong appetite for small-scale liquefied gas in Russia and neighboring regions.
October 2026 Futures Edge Higher Amid Modest Price Gains
October 2026 NYMEX natural gas futures inched up 0.28% to $2.84 per million British thermal units, reflecting the cautious tone of the broader market. Near-term contracts are outperforming, driven by heat forecasts and shrinking storage surpluses. But later-dated contracts lag, signaling that traders do not expect sustained tightness through 2026.
The split between front-month and back-month pricing reveals trader skepticism about winter severity and spring demand recovery. Until storage levels fall more sharply or production growth slows, the fundamental picture favors steady to lower prices across the curve. Only a genuine supply shock—production disruption, pipeline outage, or frigid winter—would break the current stalemate.
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