Analyst Flags 'Dizzying Volatility' for NatGas

In a U.S. natural gas report sent to Rigzone on Tuesday by the EBW Analytics Group, Eli Rubin, an energy analyst at the company, flagged “dizzying volatility into October final settlement at $3.000 per million British thermal units (MMBtu)” on Monday.

This volatility included a 50.0 cent run to Thursday’s high, followed by a 34.2 cent retreat into Monday’s lows, Rubin highlighted in the report.

“As volatility impacts ebb from (i) the Mountaineer Xpress force majeure and return to service enhanced by (ii) October options expiry and final settlement, November may seek support near technical benchmarks at the 20-day moving average at $3.07 per MMBtu, 50-day moving average at $3.04 per MMBtu, or $3.00 per MMBtu psychological level,” Rubin said in the report.

A TC Energy spokesperson confirmed to Rigzone late Tuesday that the company “responded to a mechanical issue at the Saunders Creek Regulator Station near Milton, West Virginia” which it said “affected operations”.

“TC Energy crews worked diligently to safely address the situation and restore normal operations. Service was restored on September 27, and our response activities have since wrapped up,” the spokesperson added.

“Throughout the response, our primary focus was the safety of our employees, first responders, the surrounding community, and the environment,” the spokesperson continued.

In the EBW report, Rubin noted that national cooling degree days remain supported in Texas but warned that they will “increasingly cluster across the Western U.S. into Weeks 2 and 3 - largely concluding the cooling season and slashing weather driven upside for NYMEX natural gas that lasted from July through September”.

Rubin also said the “recent production downturn and the 147 billion cubic foot year over year deficit in the South Central may offer some support” but added that “recovering supply, rising injections, and a loosening supply/demand balance suggest modest weakness over the next 7-10 days”.

The report projected that the NYMEX front-month natural gas contract price will test support over the next seven to 10 days and “test higher and retreat” over the next 30-45 days.

In its latest short term energy outlook (STEO), which was released earlier this month, the U.S. Energy Information Administration (EIA) projected that the Henry Hub spot price will average $3.43 per MMBtu in 2026 and $3.28 per MMBtu in 2027. The Henry Hub spot price averaged $3.53 per MMBtu in 2025, the STEO showed.

A quarterly breakdown included in the EIA’s latest STEO projected that the Henry Hub spot price will come in at $2.85 per MMBtu in the third quarter, $3.13 per MMBtu in the fourth quarter, $3.59 per MMBtu in the first quarter of next year, $2.76 per MMBtu in the second quarter, $3.16 per MMBtu in the third quarter, and $3.59 per MMBtu in the fourth quarter.

The Henry Hub spot price averaged $4.79 per MMBtu in the first quarter of 2026 and $2.95 per MMBtu in the second quarter of this year, the STEO showed.

NatGas Inventories, Production

In its September STEO, the EIA noted that U.S. natural gas inventories are set to be relatively high heading into the winter heating season.

“We forecast U.S. working natural gas inventories will total 3,969 billion cubic feet on October 31, 2026, five percent above the previous five-year average (2021–2025) and one percent above October 2025 levels,” it said.

“Relatively high inventories in part reflect strong growth in natural gas production in recent months. Regional balances vary entering the withdrawal season (November-March), with inventories in the Mountain region at 21 percent above their five-year average, followed by the Pacific at 10 percent, the Midwest at six percent, and South Central at four percent,” it added.

Inventories in the East are expected to enter the withdrawal season about equal to the five-year average, the EIA noted.

“Lower relative inventories in the East largely stem from a lower starting point for the injection season relative to the other regions and more limited regional production growth,” the EIA stated in its STEO.

“Inventories in the region began the injection season 11 percent below the five-year average, following relatively large winter withdrawals owing to colder-than-normal weather,” it highlighted.

“Although Appalachian natural gas production remains near record highs, its growth has been slower this year compared with other regions,” it pointed out.

U.S. marketed natural gas production continues to grow in the EIA’s forecast, “providing additional supply to meet demand and support storage additions”, the EIA outlined.

“Production increases by 4.5 billion cubic feet per day (Bcfpd) in 2026 and 4.6 Bcfpd in 2027. The Permian and Haynesville regions together account for more than 70 percent of production growth in our forecast,” it said.

“Permian production in our forecast grows by 1.7 Bcfpd in 2026 and 2.2 Bcfpd in 2027. Most Permian natural gas production is associated with crude oil production. Natural gas production in the region has been growing faster than crude oil production as natural gas-to-oil ratios increase,” it added.

“The Permian natural gas-to-oil ratio averaged nearly 4,200 cubic feet per barrel in 2025, 15 percent higher than in 2021. Additionally, pipeline capacity additions help support production growth through the forecast period,” it continued.

“Energy Transfer’s Hugh Brinson pipeline - which originates in the Permian - began interstate natural gas shipments in June, which is earlier than we had previously expected. The pipeline will ramp up flows through early 2027,” the EIA went on to state.

Haynesville production in the EIA’s forecast increases by 1.4 Bcfpd in 2026 and by 1.3 Bcfpd in 2027, “supported by forecast stable natural gas prices at Henry Hub, the region’s proximity to Gulf Coast liquefied natural gas export terminals, and nearby industrial demand,” the EIA noted.

“Appalachian production increases by about 0.6 Bcfpd in 2026 and 0.3 Bcfpd in 2027,” it added.

To contact the author, email andreas.exarheas@rigzone.com