Natural Gas News: Will Next Week’s Cold Shot Lead to a Bullish Shift in Natural Gas Futures?

Natural Gas Weekly Recap and Outlook

Natural gas prices experienced sharp fluctuations last week, driven primarily by the effects of Hurricane Milton and shifting weather forecasts. Early in the week, U.S. natural gas futures plunged due to demand destruction fears as Hurricane Milton barreled toward Florida, leading to significant power outages and cooling temperatures. As the week progressed, prices stabilized before edging higher late Friday on cooler weather forecasts for the coming week.

Last week, Natural Gas Futures settled at $2.632, down $0.222 or -7.78%.

Hurricane Milton Disrupts Demand

Natural gas futures tumbled early in the week as Hurricane Milton, a powerful Category 4 storm, threatened Florida’s Gulf Coast. The storm caused widespread power outages, dampening demand for natural gas, especially for power generation in Florida, one of the largest consumers of natural gas in the U.S. As nearly 3.4 million homes and businesses lost power, natural gas demand plummeted, creating significant bearish pressure on prices.

The storm’s impact on production was minimal, as it missed key gas production areas in the Gulf of Mexico. However, the anticipated demand destruction, coupled with mild temperatures across much of the U.S., weighed heavily on prices through midweek.

Milder Weather and Cooler Forecasts

While Hurricane Milton dominated market sentiment, weather forecasts played a crucial role in the latter part of the week. Much of the U.S. saw mild fall weather, with temperatures ranging from the 60s to 80s, contributing to lower overall demand. However, the forecast of a cold shot hitting the Midwest and Northeast next week led to short-covering and profit-taking by traders on Friday, pushing prices slightly higher. The market seemed to respond positively to the prospect of increased heating demand as temperatures cool in key regions.

EIA Storage Report Offers Some Support

The U.S. Energy Information Administration (EIA) reported an 82 Bcf injection into storage, bringing total working gas to 3,629 Bcf. This is 124 Bcf higher than last year and 176 Bcf above the five-year average. While storage levels remain comfortable ahead of the winter heating season, the lighter-than-expected injection helped support prices late in the week, preventing further declines.

Market Outlook

Looking ahead, natural gas prices may see some upward pressure as cooler temperatures are forecast for the Midwest and Northeast, potentially boosting heating demand. However, the bearish overhang from Hurricane Milton’s demand destruction could linger, particularly if power outages in Florida persist. Overall, the market remains cautious, with a key support pivot in focus. If prices hold above $2.610 and demand recovers, we could see a slight bullish tilt early next week. However, any further demand destruction or mild weather conditions could quickly turn the market bearish again. A sustained move below the pivot will reinforce the broader bearish sentiment, signaling potential for deeper declines.