September brought a mix of signals for the natural gas market. While production remained strong—holding steady above 107 Bcf/day, storage levels continued to build and are on track to reach full capacity before winter. Warm weather across much of the country reduced the need for both heating and cooling, leading to stable demand. Despite this, modest gains in near-term gas prices suggest the market is beginning to factor in potential risks heading into the colder months.

Bull Factors:

–LNG exports remain strong, with U.S. feedgas demand averaging approximately 15.6 Bcf/day in mid-September, just slightly below August’s average of 15.8 Bcf/day. This sustained export activity reflects healthy global demand, particularly from Europe and Asia, where storage refill efforts and geopolitical instability are driving interest in U.S. cargoes. High LNG feedgas levels reduce the amount of natural gas available for domestic consumption or storage, tightening the U.S. supply-demand balance and creating upward pressure on prices. 

–Storage injections have slowed relative to seasonal norms, with a net injection of 75 Bcf reported for the week ending September 19th, below the 5-year average for the same period. While storage levels are generally healthy, slower injections signal a deceleration in surplus buildup ahead of winter. This leaves less flexibility if early cold weather boosts demand or if supply hiccups emerge, supporting a risk premium in forward pricing. 

–LNG development remains a major long-term bullish driver, with the U.S. sanctioning roughly 55 million tonnes per annum (MTPA) of new liquefaction capacity in 2025 alone, equivalent to over 7 Bcf/day of future gas demand once operational. These projects, including expansions at Sabine Pass, Port Arthur, and others, demonstrate strong investor confidence in future U.S. gas exports. The forward commitment to LNG infrastructure signals increasing structural demand. 

Bear Factors:

-Gas production remains strong and above trend, with U.S. dry natural gas production averaging ~104–107 Bcf/day in September, up approximately 5.4% year-over-year. This continued strength in output reflects robust upstream investment and minimal weather-related disruptions. High production volumes ensure a well-supplied market, which places downward pressure on prices, especially if demand fails to accelerate.

-Power sector demand (gas burn) is down, averaging 37.3 Bcf/day year-to-date, which is about 2.9% lower than the same period last year. This decline is driven by increased renewable generation and mild weather, which reduced the need for gas-fired power generation. Lower gas burn reduces near-term demand for natural gas, softening spot prices and helping storage levels recover more quickly.

–September saw above-average temperatures in the West and parts of the South, while the Midwest and Northeast remained relatively mild. The lack of extreme heat or cold limits the need for both air conditioning (cooling demand) and space heating (heating demand).

–Crude prices declined in September as Kurdish oil exports (~500,000 bpd) resumed and Suez Canal traffic began normalizing. These shifts signal improved global oil flow, and combined with the potential rollback of OPEC+ production cuts, they reduce supply risk. More oil production also increases associated natural gas output, adding supply to U.S. gas markets and softening price pressure.

 Final Takeaways:

September’s energy market reflected stable supply and mixed demand signals. Natural gas production remained near record highs, storage injections were strong, and mild weather kept price volatility limited. Bullish pressure from LNG exports and tighter capacity margins in PJM was largely offset by reduced power burn and steady supply growth. As we enter Q4, market direction will hinge on early winter temperatures, storage trajectory, and global demand signals.