El Niño weather patterns are pushing US natural gas futures lower, with the November contract dropping 5.6% to $2.64 per million British thermal units. This marks the biggest weekly decline since early February, driven by above-average temperatures across the Lower 48 states. The warmth has reduced heating demand, as forecasters predict continued above-normal temperatures through early November. Commodity Weather Group forecasts October and November to be the third-warmest period since 1950, signaling a potential for a milder winter.
Analysts warn that if the warming trend continues, production cuts may be necessary to stabilize prices. BOK Financial Securities' Dennis Kissler noted that sustained warm weather could disrupt market balance. Meanwhile, European natural gas prices hit a six-month high, with the TTF benchmark reaching 93 euros per megawatt-hour. This follows concerns over supply disruptions in the Strait of Hormuz and low stockpiles ahead of winter.
Goldman Sachs' Daan Struyven warned that EU prices could rise to 150 euros per megawatt-hour if Gulf LNG exports remain at 25% of normal levels and demand spikes. JPMorgan's Natasha Kaneva suggested that El Niño could ease European demand for heating and power, but she cautioned that colder weather could strain supplies. European officials, who have long promoted climate policies, may face challenges if winter turns colder than expected, forcing increased competition for LNG on global markets.