March Nymex natural gas (NGH25) on Friday closed down by -0.099 (-2.90%).
Mar nat-gas prices settled moderately lower on Friday as a mixed US weather forecast sparked long liquidation in nat-gas futures. WSI Trader said Friday that forecasts shifted colder in much of the central and eastern US while Western North America is expected to be slightly warmer for February 17-21. Strength in European nat-gas prices limited losses in US prices as European nat-gas Friday rallied to a 15-month high.
Tightness in US nat-gas supplies is supportive of prices. Thursday's weekly EIA inventory report showed that US nat-gas inventories as of January 31 are now -4.4% below the five-year average, the widest deficit in over 2 years.
Lower-48 state dry gas production Friday was 107.5 bcf/day (+1.0% y/y), according to BNEF. Lower-48 state gas demand Friday was 98 bcf/day (+6.9% y/y), according to BNEF. LNG net flows to US LNG export terminals Friday were 14.5 bcf/day (-2.3% 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 1 rose +6.2% y/y to 81,767 GWh (gigawatt hours), and US electricity output in the 52-week period ending February 1 rose +2.5% y/y to 4,203,156 GWh.
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 51% full as of February 4, below the 5-year seasonal average of 59% full for this time of year.
Baker Hughes reported 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).
