December Nymex natural gas (NGZ25) on Wednesday closed up by +0.179 (+4.10%).
Dec nat-gas prices rallied sharply on Wednesday as late-November and early December US weather forecasts shifted colder across the eastern half of the country, which could boost nat-gas heating demand. Forecaster Atmospheric G2 said Wednesday that temperatures shifted colder in the eastern two-thirds of the US later in the November 24-28 period, and forecasts shifted colder in the middle third of the country for November 29-December 3.
The outlook for weekly US nat-gas storage to decline is also supportive for gas prices. The consensus is that Thursday's EIA inventory report will show that nat-gas inventories fell -11 bcf for the week ended November 14, versus the five-year average for a +12 bcf increase for the same period.
Higher US nat-gas production is also a bearish factor for prices. Last Wednesday, 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 Wednesday was 109.4 bcf/day (+7.5% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 86.2 bcf/day (+10.5% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 17.6 bcf/day (-1.7% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported Wednesday 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 Friday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended November 7 rose +45 bcf, above the market consensus of +34 bcf and the 5-year weekly average of +35 bcf. As of November 7, nat-gas inventories were down -0.3% y/y and were +4.5% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of November 17, gas storage in Europe was 82% full, compared to the 5-year seasonal average of 90% full for this time of year.
Baker Hughes reported last Friday that the number of active US nat-gas drilling rigs in the week ending November 14 fell by -3 to 125 rigs, falling back from a 2.25-year high of 128 rigs on November 7. 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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