Feb Nymex natural gas (NGG23) on Thursday closed down -0.126 (-2.69%).
Feb nat-gas Thursday dropped to a 10-month nearest-futures low on the outlook for warm U.S. temperatures to reduce heating demand for nat-gas. Â Maxar Technologies said well above-normal temperatures are expected across the eastern half of the U.S. through Jan 7. Â Nat-gas prices recovered from their worst levels Thursday after weekly EIA nat-gas inventories fell -213 bcf, a larger draw than expectations of -198 bcf.
Lower-48 state dry gas production on Thursday was 97.3 bcf (-0.5% y/y), below the record high of 103.6 bcf posted on Oct 3, according to BNEF. Â Lower-48 state gas demand Thursday was 82.8 bcf/day, down -5.2% y/y, according to BNEF. Â On Thursday, LNG net flow to U.S. LNG export terminals was 11.9 bcf/day, down -3% w/w.
An increase in U.S. electricity output is bullish for nat-gas demand from utility providers. Â The Edison Electric Institute reported Thursday that total U.S. electricity output in the week ended Dec 24 rose +16.5% y/y to 89,032 GWh (gigawatt hours). Â Also, cumulative U.S. electricity output in the 52-week period ending Dec 24 rose +2.6% y/y to 4,135,818 GWh.
In a bearish factor, the Freeport LNG export terminal said on Dec 2 that it expects to restart its facility around year-end, a further delay from its previous indication of a mid-December restart. Â The closure of the facility has been bearish for nat-gas prices since the reduction in LNG exports has boosted U.S. nat-gas inventories. Â The facility has been closed since an explosion on Jun 8. Â The Freeport terminal normally accounts for about 20% of all U.S. nat-gas exports and receives about 2 bcf, or 2.5%, of the output from the lower 48 U.S. states.
Nat-gas prices have support as EU countries agreed to cut nat-gas demand from Russia by 15% by early 2023. Â Also, Russia recently slashed nat-gas exports to Europe to 20% of capacity, putting upward pressure on European nat-gas prices.
Thursday's weekly EIA report was bullish for nat-gas prices since it showed U.S. nat gas inventories fell -213 bcf in the week ended Dec 23, a bigger decline than expectations of -198 bcf. Â Nat-gas inventories are -2.7% below their 5-year seasonal average.
Baker Hughes reported last Friday that the number of active U.S. nat-gas drilling rigs in the week ended Dec 23 rose by +1 to 155 rigs, moderately below the 3-1/4 year high of 166 rigs posted in the week ended Sep 9. Â Active rigs have more than doubled from the record low of 68 rigs posted in July 2020 (data since 1987).
More Energy News from Barchart
- Crude Falls on Covid Concerns and an Unexpected Build in EIA Crude Inventories
- Crude Oil Prices Close Lower Due to Strong Dollar and Weak Stocks
- Nat-Gas Prices Plunge as U.S. Production Recovers and Temps Warm
- Crude Prices Tumble as the Dollar Strengthens and Stocks Fall
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.
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