Nat-Gas Prices Edge Higher as US Weather Forecasts Turn Colder

February Nymex natural gas (NGG25) on Tuesday closed up by +0.034 (+0.86%).

Feb nat-gas prices Tuesday recovered from early losses and settled moderately higher on shifting US weather forecasts.  Nat-gas prices on Tuesday moved higher but remained below Monday’s 1-year nearest-futures high after forecaster Maxar Technologies said that the 11-15 day forecast calls for colder changes over most of the country, which will boost heating demand for nat-gas.  

Lower-48 state dry gas production Tuesday was 103.3 bcf/day (+6.6% y/y), according to BNEF.  Lower-48 state gas demand Tuesday was 120.7 bcf/day (-4.9% y/y), according to BNEF.  LNG net flows to US LNG export terminals Tuesday were 14.6 bcf/day (+3.9% w/w), according to BNEF.

A decline in US electricity output is negative for nat-gas demand from utility providers.  The Edison Electric Institute reported last Wednesday that total US (lower-48) electricity output in the week ended January 4 fell -2.73% y/y to 77,5180 GWh (gigawatt hours), although US electricity output in the 52-week period ending January 4 rose +2.37% y/y to 4,179,498 GWh.

Last Wednesday’s weekly EIA report was slightly bearish for nat-gas prices since nat-gas inventories for the week ended January 3 fell -40 bcf, a smaller draw than expectations of -42 and much less than the 5-year average draw for this time of year of -93 bcf.  As of January 3, nat-gas inventories were up +1.1% y/y and were +6.5% above their 5-year seasonal average, signaling ample nat-gas supplies.  In Europe, gas storage was 66% full as of January 12, below the 5-year seasonal average of 72% 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 10 fell -3 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). 

On the date of publication,

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