December Nymex natural gas (NGZ24) on Monday closed sharply higher by +0.150 (+5.31%)
Dec nat-gas prices Monday rose sharply on the outlook for colder US temperatures toward the end of this month, which will boost heating demand for nat-gas. Forecaster Maxar Technologies said Monday that forecasts shifted generally colder for much of the US for the November 28 to December 2 period.
Nat-gas prices also had carryover support from Monday's rally in European gas prices to just below last Friday's 11-1/2 month high after Gazprom, the state-controlled Russian nat-gas company, halted supplies to Austria, heightening fears of energy shortages in Europe as the winter season approaches.
Lower-48 state dry gas production Monday was 102.4 bcf/day (-2.7% y/y), according to BNEF. Lower-48 state gas demand Monday was 77.8 bcf/day (+1.5% y/y), according to BNEF. LNG net flows to US LNG export terminals Monday were 12 bcf/day (-11.9% 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 9 rose +3.19% y/y to 73,297 GWh (gigawatt hours), and US electricity output in the 52-week period ending November 9 rose +1.6% y/y to 4,164,003 GWh.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended November 8 rose +42 bcf, above expectations of +39 bcf and well above the 5-year average build for this time of year of +29 bcf. As of November 8, nat-gas inventories were up +3.7% y/y and were +6.1% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 93% full as of November 10, slightly above the 5-year seasonal average of 92% 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 15 fell -1 rig to 101 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).
