January Nymex natural gas (NGF25) on Tuesday closed down by -0.019 (-0.60%)
Jan nat-gas prices on Tuesday settled moderately lower on the outlook for warmer US weather, which will reduce heating demand for nat-gas and keep supplies well above average. The Commodity Weather Group said Tuesday that forecasts have shifted warmer for the eastern half of the US for December 15-19.
Warmer winter temperatures could keep US nat-gas supplies elevated, a bearish price factor. US nat-gas inventories as of November 29 are +7.8% above their 5-year seasonal average for this time of year, signaling ample nat-gas supplies.
Lower-48 state dry gas production Tuesday was 103.9 bcf/day (-1.7% y/y), according to BNEF. Lower-48 state gas demand Tuesday was 93 bcf/day (+1.5% y/y), according to BNEF. LNG net flows to US LNG export terminals Tuesday were 13.3 bcf/day (+1.1% 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 last 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.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended November 29 fell -30 bcf versus expectations of -36 bcf and less than the 5-year average draw for this time of year of -47 bcf. As of November 22, nat-gas inventories were up +5.9% y/y and were +7.8% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 82% full as of December 8, below the 5-year seasonal average of 84% 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 6 rose +2 rigs to 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).
