January Nymex natural gas (NGF26) on Wednesday closed up by +0.155 (+3.20%).
Jan nat-gas prices rallied sharply on Wednesday and posted a nearly 3-year nearest-futures high. Weather forecasts of colder-than-normal weather in the US, which will boost nat-gas heating demand, have sparked fund buying of nat-gas futures on Wednesday. Forecaster Atmospheric G2 said below-normal temperatures in the Northeast and Great Lakes will last through the end of this week and return after the middle of the month. Nat-gas prices added to their gains Wednesday on technical buying after prices rose above $5.00 per million British thermal units.
US (lower-48) dry gas production on Wednesday was 112.0 bcf/day (+6.4% y/y), according to BNEF. Lower-48 state gas demand on Wednesday was 113.1 bcf/day (+2.6% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Wednesday were 17.5 bcf/day (-4.9% 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.
The consensus is that Thursday's weekly EIA nat-gas inventories will decline by -18 bcf for the week ended November 28.
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 December 1, gas storage in Europe was 75% full, compared to the 5-year seasonal average of 85% 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.
More news from Barchart
