January Nymex natural gas (NGF26) on Thursday closed down sharply by -0.364 (-7.92%).
Jan nat-gas prices plunged to a 5-week low on Thursday and settled sharply lower. The outlook for warmer US weather, which will reduce nat-gas heating demand, is hammering prices. Forecaster Atmospheric G2 said Thursday that forecasts shifted warmer across the southern and eastern US for December 16-20, and the outlook has trended warmer for most of the US for December 21-25.
Nat-gas prices sold off on Thursday despite a larger-than-expected draw in weekly storage. The EIA reported Thursday that nat-gas inventories fell -177 bcf for the week ended December 5, a larger draw than expectations of -170 bcf.
Higher US nat-gas production is a bearish factor for prices. On Tuesday, the EIA 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.
Last Friday, nat-ga prices rallied to a nearly 3-year nearest-futures high as late-autumn temperatures have remained well below normal and are expected to persist in the near term, boosting heating demand and shrinking nat-gas storage levels.
US (lower-48) dry gas production on Thursday was 112.4 bcf/day (+8.3% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 112.3 bcf/day (+5.1% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 18.0 bcf/day (-4.0% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported Wednesday 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.
Thursday's weekly EIA report was bullish for nat-gas prices, as nat-gas inventories for the week ended December 5 fell by -177 bcf, a larger draw than the market consensus of -170 bcf and than the 5-year weekly average of -89 bcf. As of December 5, nat-gas inventories were down unchanged y/y and were +2.8% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of December 9, gas storage in Europe was 72% full, compared to the 5-year seasonal average of 81% 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 5 fell by -1 to 129, just below the 2.25-year high of 130 rigs 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.
