January Nymex natural gas (NGF25) on Wednesday closed sharply higher by +0.215 (+6.80%)
Jan nat-gas prices on Wednesday rallied sharply to a 2-week high after forecasts turned colder for the eastern half of the US for late December, signaling increased heating demand for nat-gas. Forecaster Maxar Technologies said Wednesday that the forecast shifted colder for the eastern half of the US for December 21-25.
Expectations for a larger-than-normal draw in weekly US nat-gas inventories also supported prices. Thursday's weekly EIA nat-gas inventories are expected to fall -168 bcf for the week ended December 6, a much larger draw than the five-year average for this time of year of -71 bcf.
Lower-48 state dry gas production Wednesday was 104.6 bcf/day (-1.7% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 104.7 bcf/day (+4.4% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 13.8 bcf/day (+4.3% w/w), according to BNEF.
An increase in US electricity output is positive for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total US (lower-48) electricity output in the week ended December 7 rose +10.87% y/y to 83,412 GWh (gigawatt hours), and US electricity output in the 52-week period ending December 7 rose +1.96% y/y to 4,173,295 GWh.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended November 29 fell -30 bcf versus expectations of -36 bcf and less than the 5-year average draw for this time of year of -47 bcf. As of November 22, nat-gas inventories were up +5.9% y/y and were +7.8% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 82% full as of December 8, below the 5-year seasonal average of 84% 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 December 6 rose +2 rigs to 102 rigs, modestly above the 3-1/2 year low from September 6 of 94 rigs. Active rigs have fallen since posting a 5-1/4 year high of 166 rigs in Sep 2022, up from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).
