February Nymex natural gas (NGG25) on Friday closed down sharply by -0.175 (+4.29%).
Feb nat-gas prices sold off sharply Friday on warming US weather forecasts that will curb heating demand for nat-gas. Forecaster Atmospheric G2 said US weather forecasts have shifted generally warmer across the US for Jan 27-31, except for the Northeast and parts of the West.
On Monday, nat-gas prices soared to a 1-year nearest-futures high as an arctic blast sent temperatures plunging across the US, leading to a surge in heating demand and reducing inventories. The EIA reported Thursday that nat gas inventories for the week ended January 10 fell -258 bcf, a much larger draw than the five-year average for this time of year of -128 bcf.
Lower-48 state dry gas production Friday was 103.6 bcf/day (+8.3% y/y), according to BNEF. Lower-48 state gas demand Friday was 99.4 bcf/day (-22.6% y/y), according to BNEF. LNG net flows to US LNG export terminals Friday were 15.3 bcf/day (+2.1% 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 January 11 rose +10.61% y/y to 91,182 GWh (gigawatt hours), and US electricity output in the 52-week period ending January 11 rose +2.46% y/y to 4,188,244 GWh.
Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended January 10 fell -258 bcf, close to expectations of -260 but a much bigger draw than the 5-year average draw for this time of year of -128 bcf. As of January 10, nat-gas inventories were up +2.1% y/y and were +2.5% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 65% full as of January 13, below the 5-year seasonal average of 71% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending January 17 fell -2 to 98 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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