December Nymex natural gas (NGZ24) on Wednesday closed sharply higher by +0.195 (+6.50%)
Dec nat-gas prices Wednesday extended this week's sharp rally to a 10-month nearest-futures high. The outlook for sharply colder temperatures toward the end of the month that will boost heating demand for nat-gas is pushing prices sharply higher. Forecaster Atmospheric G2 said Wednesday that forecasts shifted colder for the central and eastern US with a risk of a polar blast of temperatures for the November 25-29 period.
Lower-48 state dry gas production Wednesday was 101.8 bcf/day (-3.9% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 79.3 bcf/day (-3.0% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 14.1 bcf/day (+3.9% 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 November 16 rose +2.06% y/y to 7,764 GWh (gigawatt hours), and US electricity output in the 52-week period ending November 16 rose +1.8% y/y to 4,165,449 GWh.
The consensus is for Thursday's weekly EIA nat-gas inventories to climb by +21 bcf the week ended November 15, well above the five-year average for a draw of -16 bcf for this time of year.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended November 8 rose +41 bcf, above expectations of +39 bcf and well above the 5-year average build for this time of year of +29 bcf. As of November 8, nat-gas inventories were up +3.7% y/y and were +6.1% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 93% full as of November 10, slightly above the 5-year seasonal average of 92% 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 November 15 fell -1 rig to 101 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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