Nat-Gas Prices Fall Back on Warmer Near-Term Weather Forecast
February Nymex natural gas (NGG25) on Monday closed down -0.066 (-1.93%), giving back some of the overall +12.7 gain seen last Tuesday-Friday.
Feb nat-gas prices on Monday fell back on forecasts for warmer near-term weather, although a cold snap remained in play for January. For the near-term, Maxar forecasted above-normal temps for the central US but near-normal temps for the Eastern US. EBW AnalyticsGroup recently said the longer-range weather outlook is for a mid-January cold spell in the southern US that could lead to freeze-offs and nat-gas production disruptions.
Lower-48 state dry gas production Monday was 103.8 bcf/day (-1.8% y/y), according to BNEF. Lower-48 state gas demand Monday was 103.5 bcf/day (+30.5% y/y), according to BNEF. LNG net flows to US LNG export terminals Monday were 14.1 bcf/day (+2.0% 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 December 14 rose +2.97% y/y to 80,641 GWh (gigawatt hours), and US electricity output in the 52-week period ending December 14 rose +2.02% y/y to 4,175,618 GWh.
Last Thursday's weekly EIA report was slightly bullish for nat-gas prices since nat-gas inventories for the week ended December 13 fell -125 bcf, right on expectations but a much larger draw than the 5-year average draw for this time of year of -92 bcf. As of December 13, nat-gas inventories were up +1.3% y/y and were +3.8% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 77% full as of December 17, below the 5-year seasonal average of 80% 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 20 fell -1 rig 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).
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.
