December Nymex natural gas (NGZ25) on Tuesday closed down by -0.125 (-2.75%).
Dec nat-gas prices retreated on Tuesday amid warmer US weather forecasts for early next month, potentially reducing nat-gas heating demand. Forecaster Vaisala said Tuesday that forecasts shifted warmer across the US for December 5-9. Also, the liquidation of December nat-gas futures contracts weighed on prices, as the contracts expire on Tuesday.
Expectations of a smaller weekly EIA storage draw are another negative factor for gas prices. The consensus is that Wednesday's weekly EIA nat-gas inventories fell -9 bcf in the week ended November 21, a smaller draw than the five-year average for this time of year of -25 bcf.
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 111.2 bcf/day (+6.7% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 82.0 bcf/day (-1.5% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 18.2 bcf/day (+3.6% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported last 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 Thursday's weekly EIA report was bullish for nat-gas prices, as nat-gas inventories for the week ended November 14 fell by -14 bcf, a larger draw than the market consensus of -12 bcf and well below the 5-year weekly average of a +12 bcf increase. As of November 14, nat-gas inventories were down -0.6% y/y and were +3.8% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of November 22, gas storage in Europe was 79% full, compared to the 5-year seasonal average of 89% 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 21 rose by +2 to 127 rigs, just below the 2.25-year high of 128 rigs from 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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