January Nymex natural gas (NGF25) on Wednesday closed higher by +0.001 (+0.03%)
Jan nat-gas prices on Wednesday recovered from a 2-1/2 week low and settled slightly higher. Short covering emerged in nat-gas futures late in the session Wednesday after updated forecasts called for the western half of the US to turn colder after mid-month, which would boost heating demand for nat-gas. Nat-gas prices Wednesday initially extended this week's decline to a 2-1/2 week low after Maxar Technologies said widespread above-normal temperatures are seen across the Lower 48 states from December 14-18.
Warmer winter temperatures could keep US nat-gas supplies elevated, a bearish price factor. US nat-gas inventories as of November 22 are +7.2% above their 5-year seasonal average for this time of year, signaling ample nat-gas supplies.
Lower-48 state dry gas production Wednesday was 104.7 bcf/day (-1.5% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 101.6 bcf/day (+12.6% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 14.0 bcf/day (+7.1% w/w), according to BNEF.
A decline in US electricity output is negative for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total US (lower-48) electricity output in the week ended November 30 fell -3.94% y/y to 74,881 GWh (gigawatt hours), although US electricity output in the 52-week period ending November 30 rose +1.76% y/y to 4,165,120 GWh.
The consensus is for Thursday's weekly EIA nat-gas inventories to fall by -36 bcf for the week ended November 29, a smaller draw than the five-year average for this time of year of -47 bcf.
Last Wednesday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended November 22 fell -2 bcf versus expectations of -3 bcf and well above the 5-year average draw for this time of year of -30 bcf. As of November 22, nat-gas inventories were up +3.4% y/y and were +7.2% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 85% full as of December 1, below the 5-year seasonal average of 87% 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 29 rose +1 rig to 100 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).
