February Nymex natural gas (NGG26) on Friday closed down -0.238 (-6.99%),
Feb nat-gas prices added to this week's sell-off on Friday, dropping to a 2.5-month nearest-futures low. Forecasts of warmer US weather that will reduce nat-gas heating demand and allow storage levels to rebuild are undercutting prices. Forecaster NatGasWeather said Friday that forecasts are warming across most of the US for January 9-15, with temperatures shifting even warmer across most of the country for January 16-23.
Higher US nat-gas production is bearish for prices. The EIA on December 9 raised its forecast for 2025 US nat-gas production to 107.74 bcf/day from its November estimate of 107.70 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 Friday was 113.5 bcf/day (+10.7% y/y), according to BNEF. Lower-48 state gas demand on Friday was 87.9 bcf/day (-28.1% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Friday were 19.5 bcf/day (+0.1% 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 January 3 rose +6.7% y/y to 82,732 GWh (gigawatt hours), and US electricity output in the 52-week period ending January 3 rose +3.0% y/y to 4,306,606 GWh.
Thursday's weekly EIA report was bullish for nat-gas prices, as nat-gas inventories for the week ended January 2 fell by -119 bcf, a larger draw than the market consensus of -13 bcf and much larger than the 5-year weekly average draw of -92 bcf. As of January 2, nat-gas inventories were down -3.5% y/y and were +1.0% above their 5-year seasonal average, signaling ample nat-gas supplies. As of January 6, gas storage in Europe was 58% full, compared to the 5-year seasonal average of 72% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending January 9 fell by -1 to 124 rigs, modestly below the 2.25-year high of 130 set on 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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