February Nymex natural gas (NGG25) on Tuesday closed down sharply by -0.223 (-6.07%).
Feb nat-gas prices Tuesday retreated and gave back much of Monday's sharp advance after US weather forecasts turned warmer, signaling less heating demand for nat-gas. NatGasWeather said Tuesday that a brief break in frigid weather is expected over much of the US in mid-month, bringing heating demand for nat-gas closer to normal.
Lower-48 state dry gas production Tuesday was 100.2 bcf/day (-6.9% y/y), according to BNEF. Lower-48 state gas demand Tuesday was 122.9 bcf/day (+17.0% y/y), according to BNEF. LNG net flows to US LNG export terminals Tuesday were 14.5 bcf/day (+0.9% 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 last 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.
The consensus is that Wednesday's weekly EIA nat-gas inventories for the week ended January 3 fell by -42 bcf.
Last 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 70% full as of January 5, below the 5-year seasonal average of 76% 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).
