Nat-Gas Prices Push Higher on Forecasts for Cold US Temps

January Nymex natural gas (NGF25) on Thursday closed higher by +0.036 (+1.18%)

Jan nat-gas prices on Thursday posted moderate gains on the outlook for colder US weather over the country's eastern half, which will boost heating demand for nat-gas.  Forecaster Atmospheric G2 said Thursday that forecasts shifted much colder over the eastern half of the US from December 10-14.  The market shrugged off Thursday's bearish weekly EIA inventory report after nat-gas inventories fell -30 bcf, a smaller draw than expectations of -36 bcf.

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 Thursday was 103.7 bcf/day (-0.4% y/y), according to BNEF.  Lower-48 state gas demand Thursday was 109.4 bcf/day (+16.5% y/y), according to BNEF.  LNG net flows to US LNG export terminals Thursday were 14.2 bcf/day (+1.5% 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 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.

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 84% full as of December 3,  below the 5-year seasonal average of 86% full for this time of year.

Baker Hughes reported last Wednesday that the number of active US nat-gas drilling rigs in the week ending November 29 rose +1 rig to 100 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).