January Nymex natural gas (NGF26) on Friday closed up sharply by +0.226 (+4.46%).
Jan nat-gas prices soared on Friday to a nearly 3-year nearest-futures high as forecasts of frigid US temperatures are expected to boost nat-gas heating demand. Nat-gas prices have rallied sharply over the past week as late-autumn temperatures have remained well below normal and are expected to persist, boosting heating demand and shrinking nat-gas storage levels. Forecaster Atmospheric G2 said Friday that significantly colder-than-normal temperatures are forecast over the eastern half of the US for December 10-14, with the pattern continuing into the following week.
US (lower-48) dry gas production on Friday was 111.7 bcf/day (+7.2% y/y), according to BNEF. Lower-48 state gas demand on Friday was 113.3 bcf/day (-1.2% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Friday were 18.3 bcf/day (-1.2% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported on Wednesday that US (lower-48) electricity output in the week ended November 29 rose +2.11% y/y to 76,459 GWh (gigawatt hours), and US electricity output in the 52-week period ending November 29 rose +2.99% y/y to 4,289,746 GWh.
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.
Thursday's weekly EIA report was bearish for nat-gas prices, as nat-gas inventories for the week ended November 28 fell by -12 bcf, a smaller draw than the market consensus of -18 bcf and than the 5-year weekly average of a -43 bcf draw. As of November 28, nat-gas inventories were down -0.4% y/y and were +5.1% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of December 3, gas storage in Europe was 74% full, compared to the 5-year seasonal average of 84% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending December 5 fell by -1 to 129, just below the 2.25-year high of 130 rigs from November 28. 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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