Natural Gas - A Slow Start To This Winter, The Market Is A Bit Ahead Of Itself

The early heating demand season is off to a slow start. The good news for the bulls is that this year's weather outlook is not as warm as last year's. The bad news is that Lower 48 gas production is starting to increase with today's reading close to ~103 Bcf/d.

We will likely get production to average close to ~103 Bcf/d this weekend before moving even higher in November. Matterhorn is now moving ~1.4 Bcf/d, so there's another ~1.1 Bcf/d to go. The expected increase combined with the delays we saw in TILs this summer will push Lower 48 gas production back to ~106 Bcf/d.

We suspect this production increase coupled with the mildly bearish weather outlook will be terrible for natural gas.