February Nymex natural gas (NGG25) on Wednesday closed up by +0.064 (+1.84%).
Feb nat-gas prices Wednesday rebounded from a 1-month low and settled moderately higher. Short covering emerged in nat-gas futures Wednesday after European gas prices soared to a 15-month high. Nat-gas prices Wednesday initially fell to a 1-month low on the outlook for spring-like temperatures across the southern S, which curbs heating demand for nat-gas. NOAA said Wednesday that above-normal temperatures and early spring conditions are forecast for the southern half of the US from February 3-7.
Nat-gas prices also garnered support on expectations for a bigger-than-normal draw in weekly US supplies on Thursday. The consensus is for Thursday's EIA inventories to fall by -316 bcf for the week ended January 24, a much larger draw than the five-year average for this time of year of -189 bcf.
Earlier this month, 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.
Lower-48 state dry gas production Wednesday was 105.5 bcf/day (+0.3% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 100.8 bcf/day (+4.4% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 14.3 bcf/day (+46.1% 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 25 rose +21.3% y/y to 97,259 GWh (gigawatt hours), and US electricity output in the 52-week period ending January 24 rose +2.25% y/y to 4,198,401 GWh.
Last Thursday's weekly EIA report was slightly bearish for nat-gas prices since nat-gas inventories for the week ended January 17 fell -223 bcf, a smaller draw than expectations of -247 but a much bigger draw than the 5-year average draw for this time of year of -167 bcf. As of January 17, nat-gas inventories were up +1.3% y/y and were +0.7% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 56% full as of January 26, below the 5-year seasonal average of 63% 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 January 24 rose +1 to 99 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).
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. For more information please view the Barchart Disclosure Policy here.More news from Barchart
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