December Nymex natural gas (NGZ24) on Thursday closed down sharply by -0.138 (-4.85%)
Dec nat-gas prices on Thursday sold off sharply on warm US weather and a larger-than-average build in weekly nat-gas supplies. Nat-gas prices have plunged this week on warmer-than-normal weather forecasts for the US, which would reduce heating demand for nat-gas. On Thursday, the Commodity Weather Group said that forecasts have shifted warmer for most of the US for November 5-9.
Nat-gas prices also came under pressure Thursday after weekly EIA inventories rose +78 bcf, above the five-year average for this time of year of +67 bcf.
Lower-48 state dry gas production Thursday was 101.1 bcf/day (-2.4% y/y), according to BNEF. Lower-48 state gas demand Thursday was 71 bcf/day (-20.2% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 13.1 bcf/day (+5.42 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 October 26 rose +0.11% y/y to 71,417 GWh (gigawatt hours), and US electricity output in the 52-week period ending October 26 rose +1.62% y/y to 4,160,833 GWh.
Thursday's weekly EIA report was slightly bearish for nat-gas prices since nat-gas inventories for the week ended October 25 rose +78 bcf, below expectations of +83 bf but above the 5-year average build for this time of year of +67 bcf. As of October 25, nat-gas inventories were up +2.2% y/y and were +4.8% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 95% full as of October 29, above the 5-year seasonal average of 93% 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 October 25 rose by +2 rigs to 101 rigs, modestly above the 3-1/3 year low from September 6 of 94 rigs. Active rigs have fallen since posting a 5-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).
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.
