February Nymex natural gas (NGG25) on Tuesday closed down sharply by -0.226 (-6.11%).
Feb nat-gas prices Tuesday fell sharply for a second day and posted a 2-1/2 week low. Nat-gas prices are under pressure as weather forecasts have warmed for most of the US for early next month, which will curb heating demand for nat-gas. Forecaster Maxar Technologies said Tuesday that the eastern half of the US will see above-normal temperatures for February 7-11.
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 Tuesday was 104 bcf/day (-0.9% y/y), according to BNEF. Lower-48 state gas demand Tuesday was 102.7 bcf/day (+11% y/y), according to BNEF. LNG net flows to US LNG export terminals Tuesday were 14.3 bcf/day (+32.3% w/w), according to BNEF.
A decrease in US electricity output is negative 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 January 18 fell -7.35% y/y to 87,343 GWh (gigawatt hours), although US electricity output in the 52-week period ending January 18 rose +1.86% y/y to 4,181,320 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).
