February Nymex natural gas (NGG25) on Tuesday closed down sharply by -0.303 (-7.70%).
Feb nat-gas prices on Tuesday sold off sharply and gave back nearly half of Monday's surge after US weather forecasts warmed considerably, which alleviated concerns that frigid temperatures next month would substantially boost heating demand for nat-gas. Forecaster Maxar Technologies said Tuesday that weather models for the Midwest and South shifted to warmer temperatures for the January 10-14 outlook. Nat-gas prices on Monday had surged to a nearly 1-year nearest-futures high on a colder outlook for next month.
Lower-48 state dry gas production Tuesday was 104.7 bcf/day (-1.1% y/y), according to BNEF. Lower-48 state gas demand Tuesday was 89.3 bcf/day (-5.8% y/y), according to BNEF. LNG net flows to US LNG export terminals Tuesday were 14.6 bcf/day (+3.4% 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 last Thursday that total US (lower-48) electricity output in the week ended December 21 rose +1.87% y/y to 79,947 GWh (gigawatt hours), and US electricity output in the 52-week period ending December 21 rose +2.32% y/y to 4,177,082 GWh.
Last Friday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended December 20 fell -93 bcf, a smaller draw than expectations of -100 and a much smaller draw than the 5-year average draw for this time of year of -127 bcf. As of December 20, nat-gas inventories were up +1.1% y/y and were +4.9% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 74% full as of December 28, below the 5-year seasonal average of 78% 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 27 was unchanged at 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).
