Feb Nymex natural gas (NGG23) on Friday closed down -0.010 (-0.27%).
Feb nat-gas prices Friday dropped to a 1-1/2 year low and closed slightly lower. Â Nat-gas prices posted a 1-1/2 year low as above-normal temperatures in the U.S. undercut heating demand for nat-gas. Â Also, nat-gas has negative carry-over pressure from Thursday after a report from the Rapidian Energy Group said that the Freeport LNG export terminal, which has been closed since an explosion on June 8, will likely be offline "for several more months." Â Nat-gas prices recovered from their worst levels Friday after weakness in the dollar sparked some short-covering in nat-gas futures.
The Rapidian Energy Group on Thursday said that the Freeport LNG export terminal, which has been closed since an explosion on Jun 8, will likely be offline "for several more months." Â The report cited the delay in the "extensive personnel training" that is being required by federal regulators overseeing the restart of the terminal. 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 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.
The National Oceanic and Atmospheric Administration (NOAA) expects above-normal temperatures for most of Europe over the next two weeks and for the U.S. through mid-January. Â The warm temperatures this winter have caused rising European nat-gas inventories, with gas storage across Europe currently 84% full, far above the 5-year average for this time of year of 70%. Â
Lower-48 state dry gas production on Friday was 101.8 bcf (+8.2% y/y), modestly below the record high of 103.6 bcf posted on Oct 3, according to BNEF. Â Lower-48 state gas demand Friday was 91.8 bcf/day, down sharply by -17.1% y/y due to above-normal temperatures, according to BNEF. Â LNG net flow to U.S. LNG export terminals Friday was 12.5 bcf/day, up +6.8% 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 31 rose +9.8% y/y to 79,495 GWh (gigawatt hours). Â Also, cumulative U.S. electricity output in the 52-week period ending Dec 31 rose +2.8% y/y to 4,142,901 GWh.
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 bearish for nat-gas prices since it showed U.S. nat gas inventories fell -221 bcf in the week ended Dec 30, a smaller decline than expectations of -240 bcf. Â Nat-gas inventories are -5.7% below their 5-year seasonal average.
Baker Hughes reported Friday that the number of active U.S. nat-gas drilling rigs in the week ended Jan 6 fell by -4 to 152 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).
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More Natural Gas News from Barchart
- Crude Climbs on Dollar Weakness and Strong Stocks
- Nat-Gas Prices Sink on Bearish EIA Report and Delay in Reopening Freeport
- Crude Oil Rebounds on Signs of Improvement in Chinese Fuel Demand
- Nat-Gas Prices Rebound as a Weaker Dollar Spurs Short Covering
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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