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).
