January Nymex natural gas (NGF26) on Tuesday closed down by -0.081 (-1.65%).
Jan nat-gas prices fell from a 3-year nearest-futures high on Tuesday and settled sharply lower. Long liquidation pressures emerged on Tuesday to knock nat-gas prices lower after updated US weather forecasts turned warmer, potentially reducing nat-gas heating demand. Forecaster Atmospheric G2 on Tuesday said that forecasts shifted warmer in the eastern and southern US for December 12-16.
Nat-gas prices were also weighed down by negative carryover from Tuesday's slide in European nat-gas prices to a 1.5 year low.
Nat-gas prices initially rallied on Tuesday to a 3-year nearest-futures high after US weather forecasts projected below-normal temperatures in the Northeast and Great Lakes through the end of this week.
Higher US nat-gas production is a bearish factor for prices. On November 12, the EIA raised its forecast for 2025 US nat-gas production by +1.0% to 107.67 bcf/day from September's estimate of 106.60 bcf/day. US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.
US (lower-48) dry gas production on Tuesday was 112.7 bcf/day (+7.5% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 114.8 bcf/day (+1.5% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 17.6 bcf/day (-2.1% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported on November 19 that US (lower-48) electricity output in the week ended November 15 rose +5.33% y/y to 75,586 GWh (gigawatt hours), and US electricity output in the 52-week period ending November 15 rose +2.9% y/y to 4,286,124 GWh.
Last Wednesday's weekly EIA report was bullish for nat-gas prices, as nat-gas inventories for the week ended November 21 fell by -11 bcf, a larger draw than the market consensus of -9 bcf but less than the 5-year weekly average of a -25 bcf draw. As of November 21, nat-gas inventories were down -0.8% y/y and were +4.2% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of November 30, gas storage in Europe was 75% full, compared to the 5-year seasonal average of 86% full for this time of year.
Baker Hughes reported last Wednesday that the number of active US nat-gas drilling rigs in the week ending November 28 rose by +3 to 130 rigs, a 2.25-year high. In the past year, the number of gas rigs has risen from the 4.5-year low of 94 rigs reported in September 2024.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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