Natural Gas Prices Hit Two-Week High as Isaias Cuts Gulf Output

A Storm-Driven Bump in Natural Gas Prices

US natural gas futures ended the week at their highest level in about two weeks. The main cause was Hurricane Isaias, which forced Gulf of Mexico producers to evacuate platforms and cut flows just as domestic output was already slipping from record levels. On Friday, the November contract on the New York Mercantile Exchange rose 5.2 cents, or 1.6%, to settle at $3.22 per million British thermal units. That was its strongest close since September 24.29 The government's offshore regulator reported that about 1.26 billion cubic feet per day of Gulf gas output, roughly 59% of the region's total, was shut in by Friday afternoon. Lower 48 dry gas production fell to 109.3 bcf/day, its lowest level since January.26

The rally built over several sessions. Earlier in the week, futures held near a one-week high because demand forecasts had been raised and a Texas Eastern pipeline in Kentucky had an unplanned outage.27 Midweek reporting described the front month heading for its fifth straight gain, the first such run since May, with a cumulative rise of about 10%.21

Coverage of Thursday's session did not agree. One report had futures up more than 2% at about $3.28 during trading.21 Another said the contract slipped 1.1 cents to $3.192 after a bigger-than-expected storage report took some of the momentum out.23 The likeliest explanation is that the two snapshots came from different points in a volatile day. Either way, the weekly direction was clearly up, even though the price stays inside the roughly $2.60–$3.40 range traders have watched for months.30

Why the Hurricane Matters Less Than It Seems

The Gulf shut-ins sound dramatic, but the federal offshore Gulf supplies only about 2% of US marketed gas, or 1.9 bcfd of the 118.4 bcfd produced in 2025, according to the Energy Information Administration.21 Most US supply comes from inland shale basins far from the storm's path, mainly the Marcellus/Utica in Appalachia and the Permian in West Texas and New Mexico.23

That is why analysts keep noting that Gulf storms more often push gas prices down than up. They can shut LNG export plants and cut power to homes and businesses, and both of those reduce demand.23 This time, the storm's track toward the Florida Panhandle appeared to miss most Gulf Coast liquefaction capacity.14 Traders were left with the supply loss and little of the demand loss.

My reading is that Isaias gave a short-term lift to a market that was already tightening for ordinary reasons. LSEG data show Lower 48 output falling from record highs of 113.3 bcfd in August and September to about 111.2 bcfd so far in October. Pipeline force majeures in Kentucky, Texas and West Virginia account for part of that drop.21 Once Gulf platforms are back online and those pipeline problems are fixed, the supply side should loosen again.

Storage points the same way. The EIA reported an 85 bcf injection for the week ended October 2, more than the 79 bcf analysts expected. That left inventories at 3,500 bcf, about 2% above the five-year average.23 Another sign of a calm winter outlook: the premium of December futures over November recently fell to a record low of about 28 cents.27 The Natural Gas Supply Association expects winter production to average 112.5 bcfd and to grow faster than demand, which would put downward pressure on prices compared with last winter.14

LNG Export Terminals: Temporary Dips, Structural Pull

The LNG picture explains a lot of the push and pull in prices. LSEG estimates that feedgas to the nine large US export plants averaged 16.9 bcfd so far in October. That is down from 17.9 bcfd in September and well below April's record of 18.8 bcfd. The two main reasons are a liquefaction train outage at Freeport LNG in Texas and annual maintenance at Cove Point in Maryland.21 One estimate puts the demand lost to the Freeport outage alone at nearly 5 bcf in a single week.15

The trackers disagree on the absolute numbers. S&P Global's CERA data had the major terminals scheduled for about 19 bcfd in early October after averaging close to 19.5 bcfd in September.16 NGI's Entropic Analytics data showed October flows near 18 bcfd.17 These gaps likely come from different methods, such as scheduled nominations versus estimated deliveries. All of the trackers agree on the trend: feedgas dipped this month because of outages, not because buyers lost interest.

Overseas demand looks strong. European gas storage was about 73% full in early October, nearly 10 percentage points below a year earlier.19 Gas Infrastructure Europe has warned that the continent may need to import even more LNG than last winter's record.15 The Dutch TTF benchmark traded near $25.90 per mmBtu and Asia's JKM near $25.88, against roughly $3.25 at Henry Hub.23 More than half of US LNG cargoes delivered in September went to Europe.16 The supply shortfall tied to the Middle East conflict has made new US export capacity even more important for global balances this winter.17 Sempra's Port Arthur LNG is moving through commissioning ahead of a 2027 startup.14 Golden Pass, by contrast, is ramping up more slowly than analysts expected, which has trimmed winter demand forecasts.13

Data Centers: The Longer-Term Demand Story

The two-week high is a weather story. The longer-term case for higher gas prices rests increasingly on electricity demand from AI data centers. BloombergNEF now projects that gas burned to power US data centers will rise by 15 bcfd in the decade to 2035. That is more than double its December forecast, and more gas than any country consumes except China, Russia, Iran and the United States.32 In that outlook, power-sector gas demand rises to 54 bcfd by 2035. Only LNG exports, which add 21 bcfd, contribute more demand growth.32 BloombergNEF also estimates producers would need about 11 bcfd more than currently projected supply growth to keep up.39

The effect is already showing up in the near-term data. Power plants burned about 36.7 bcfd in the latest daily reading. Next-day power at PJM West, the grid region with the heaviest data center build-out, jumped to $92.72 per megawatt-hour from $69.07 the day before.23 EIA filings show planned grid-connected gas capacity through 2030 at 60.4 GW, up 44% in eight months. Texas accounts for about a third of that.31 PJM has warned that the power sector is moving from managing surplus supply to managing scarcity.33

Forecasters agree on the direction but not the size. BloombergNEF's lead author said the uncertainty runs "both to the upside and the downside."32 S&P Global's grid outlook notes that new gas plants face high costs and long lead times, while solar and storage dominate 2026 capacity additions.37 Data center demand will raise the floor under Henry Hub over time, but it does not explain this week's move.

Crude Oil and Gasoline: A Very Different Market

Oil markets have much bigger problems than the gas market. WTI closed at $91.66 a barrel on October 9 and Brent at $104.42. US commercial crude stocks fell 3.2 million barrels to 424.1 million.1 Brent moved back above $105 during Thursday trading as Iranian attacks on tankers in the Strait of Hormuz intensified.2 Isaias also hit oil harder than gas: Gulf producers shut in about 1.5 million barrels per day, nearly 72% of the region's oil output.29

The gap between the two benchmarks has drawn attention. Brent's premium over WTI widened to roughly $12–$14, partly because tanker freight out of the Persian Gulf rose to about $33 a barrel. Analysts' estimates differ depending on which contract months they compare.8 Supply discipline is not easing the strain. Seven OPEC+ members kept November production targets unchanged.8 Core members' output is still about 5 million barrels per day below pre-war levels.5 Onshore US crude production keeps rising, averaging 13.979 million barrels per day in the week ended October 2, about 350,000 bpd higher than a year earlier.7

At the pump, AAA's national average for regular gasoline was $4.36 on October 8. That was down about 5 cents from the week before but up from $3.12 a year earlier. This is the first October on record with the average above $4.48 Diesel rose faster, averaging $6.32 a gallon on October 6, up nearly 72% from a year earlier.44 With midterm elections approaching on November 3, President Trump is reportedly preparing a directive for officials to consider using the Defense Production Act to increase fuel output and control diesel prices.29

The Bottom Line

This week's two-week high for natural gas reflects storm-related supply losses arriving on top of a dip in production caused by pipeline problems. It is not a sign of real scarcity. Storage is above normal, winter supply forecasts are comfortable, and LNG feedgas should recover once Freeport and Cove Point return to full service. The bigger risks for gas lie further ahead: export capacity is expanding, Europe is short on storage, and data center power demand is growing faster than expected. Oil is the opposite case. Its prices are driven by ongoing geopolitical disruption, and that is why US drivers are paying record autumn prices while Henry Hub stays near $3.