December Nymex natural gas (NGZ24) on Monday closed up sharply by +0.251 (+9.40%)
Dec nat-gas prices soared Monday to a 6-week nearest-futures high. A decline in US nat-gas production and cooler US weather forecasts that will boost heating demand for nat-gas have sparked a rally in nat-gas prices. On Monday, lower-48 state dry gas production fell -7.0% y/y to 98.3 bcf. Also, forecaster Maxar Technologies said Monday that forecasts have shifted colder for the eastern part of the US, and in the longer term, the weather is now expected to be cooler for the southern half of the country at the end of the month.
Lower-48 state dry gas production Monday was 98.3 bcf/day (-7.0% y/y), according to BNEF. Lower-48 state gas demand Monday was 74.4 bcf/day (-9.9% y/y), according to BNEF. LNG net flows to US LNG export terminals Monday were 13.6 bcf/day (+13.3% 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 last Wednesday that total US (lower-48) electricity output in the week ended November 2 rose +1.24% y/y to 73,690 GWh (gigawatt hours), and US electricity output in the 52-week period ending November 2 rose +1.56% y/y to 4,161,739 GWh.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended November 1 rose +69 bcf, above expectations of +68 bcf and well above the 5-year average build for this time of year of +32 bcf. As of November 1, nat-gas inventories were up +4.2% y/y and were +5.8% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 95% full as of November 3, 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 November 8 was unchanged at 102 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.
