February Nymex natural gas (NGG26) on Monday closed down -0.095 (-2.63%),
Feb nat-gas prices fell to a 2.25-month low on the nearest futures chart on Monday and settled sharply lower. Weather forecasts of above-normal US temperatures, which will reduce nat-gas heating demand, are weighing on prices. Forecaster Xweather said Monday that the outlook has shifted warmer for temperatures from the Midwest to the East Coast for January 10-14.
Higher US nat-gas production is also 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 Monday was 110.5 bcf/day (+4.3% y/y), according to BNEF. Lower-48 state gas demand on Monday was 96.7 bcf/day (-6.8% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Monday were 19.7 bcf/day (-1.5% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported on December 10 that US (lower-48) electricity output in the week ended December 6 rose +2.3% y/y to 85,330 GWh (gigawatt hours), and US electricity output in the 52-week period ending December 6 rose +2.84% y/y to 4,291,665 GWh.
Last Wednesday's weekly EIA report was bearish for nat-gas prices, as nat-gas inventories for the week ended December 26 fell by -38 bcf, a smaller draw than the market consensus of -51 bcf and much smaller than the 5-year weekly average draw of -120 bcf. As of December 26, nat-gas inventories were down -1.1% y/y and were +1.7% above their 5-year seasonal average, signaling ample nat-gas supplies. As of January 3, gas storage in Europe was 61% full, compared to the 5-year seasonal average of 73% full for this time of year.
Baker Hughes reported last Tuesday that the number of active US nat-gas drilling rigs in the week ending January 2 fell by -2 to 125 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.
