March Nymex natural gas (NGH25) on Wednesday closed up by +0.046 (+1.31%).
Mar nat-gas prices Wednesday settled moderately higher but remained below Tuesday's 2-1/2 week high. Forecasts for colder US weather that boost heating demand for nat-gas underpin gas prices. Forecaster Maxer Technologies said Wednesday that forecasts have trended colder for the eastern half of the country for February 17-21.
Tightness in US nat-gas supplies is supportive of prices. Last Thursday's weekly EIA inventory report showed that US nat-gas inventories as of January 31 were -4.4% below the five-year average, the lowest level in over 2 years. The consensus is that Thursday's weekly EIA nat-gas inventories fell -91 bcf, a smaller draw than the five-year average of -144 bcf for this time of year.
Lower-48 state dry gas production Wednesday was 106.5 bcf/day (+0.3% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 114.1 bcf/day (+20.7% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 15.2 bcf/day (+5.6% 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 Wednesday that total US (lower-48) electricity output in the week ended February 8 rose +4.8% y/y to 79,239 GWh (gigawatt hours), and US electricity output in the 52-week period ending February 8 rose +2.6% y/y to 4,206,808 GWh.
Last Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended January 31 fell -174 bcf, a larger draw than expectations of -171 bcf and right on the 5-year average draw for this time of year. As of January 31, nat-gas inventories were down -7.2% y/y and -4.4% below their 5-year seasonal average, signaling tight nat-gas supplies. In Europe, gas storage was 48% full as of February 9, below the 5-year seasonal average of 57% 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 February 7 rose +2 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).
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