January Nymex natural gas (NGF26) on Thursday closed down by -0.116 (-2.88%).
Jan nat-gas prices gave up an early advance on Thursday and fell sharply after the weekly EIA nat-gas storage report showed a draw of less than expected. The EIA reported that nat-gas inventories fell -167 bcf for the week ended December 12, a smaller draw than expectations of -176 bcf. Nat-gas prices initially moved higher on Thursday after forecaster Vaisala said below-normal temperatures are expected in the eastern US for December 28-January 1, potentially boosting nat-gas heating demand.
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On Tuesday, nat-gas prices fell to a 7-week low amid above-normal US temperatures, which curbed heating demand. Since posting a 3-year high on December 5, nat-gas prices have been in freefall as warmer US weather has curbed heating demand and allowed nat-gas storage to rebuild.
Higher US nat-gas production is also bearish for prices. Last Tuesday, the EIA raised its forecast for 2025 US nat-gas production to 107.74 bcf/day from its November estimate of 107.70 bcf/day. US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.
US (lower-48) dry gas production on Thursday was 112.9 bcf/day (+8.8% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 90.9 bcf/day (-4.4% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 17.5 bcf/day (-3.6% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported last Wednesday that US (lower-48) electricity output in the week ended December 6 rose +2.3% y/y to 85,330 GWh (gigawatt hours), and US electricity output in the 52-week period ending December 6 rose +2.84% y/y to 4,291,665 GWh.
Thursday’s weekly EIA report was slightly bearish for nat-gas prices, as nat-gas inventories for the week ended December 12 fell by -167 bcf, a smaller draw than the market consensus of -176 bcf but larger than the 5-year weekly average of -96 bcf. As of December 12, nat-gas inventories were down -1.2% y/y and were +0.9% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of December 16, gas storage in Europe was 69% full, compared to the 5-year seasonal average of 78% 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 12 fell by -2 to 127 rigs, just below the 2.25-year high of 130 rigs set on November 28. In the past year, the number of gas rigs has risen from the 4.5-year low of 94 rigs reported in September 2024.
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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