February Nymex natural gas (NGG25) on Friday closed down sharply by -0.306 (-8.36%).
Feb nat-gas prices settled sharply lower on Friday after updated weather forecasts trended warmer for the eastern US, which will curb heating demand for nat-gas. NatGasWeather.com said weather models shifted warmer for the eastern US for mid-January. Losses in nat-gas prices accelerated Friday after the EIA reported that nat-gas inventories for the week of December 27 fell -116 bcf, a smaller draw than expectations of -128 bcf.
Lower-48 state dry gas production Friday was 104.9 bcf/day (-0.3% y/y), according to BNEF. Lower-48 state gas demand Friday was 104.2 bcf/day (-1.6% y/y), according to BNEF. LNG net flows to US LNG export terminals Friday were 14.7 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 Thursday that total US (lower-48) electricity output in the week ended December 28 rose +6.25% y/y to 77,960 GWh (gigawatt hours), and US electricity output in the 52-week period ending December 28 rose +2.59% y/y to 4,181,671 GWh.
Friday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended December 27 fell -116 bcf, a smaller draw than expectations of -128, although more than the 5-year average draw for this time of year of -104 bcf. As of December 27, nat-gas inventories were down -1.8% y/y and were +4.7% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 74% full as of December 28, below the 5-year seasonal average of 78% 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 3 rose +1 to 103 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).
