March Nymex natural gas (NGH25) on Tuesday closed down by -0.099 (-2.95%).
Mar nat-gas prices posted moderate losses on Tuesday on warmer US weather forecasts. Tuesday's US weather forecasts for mid-month shifted slightly warmer, which should curb heating demand for nat-gas and weighed on prices. Nat-gas prices were also undercut after China imposed a 15% tariff on liquified natural gas imported from the US, which would reduce US LNG exports to China.
Tightness in US nat-gas supplies is supportive of prices. Last Thursday's weekly EIA inventory report showed that US nat-gas inventories as of January 24 are now -4.1% below the five-year average for this time of year, the first time supplies have been below the five-year average in 2 years.
Lower-48 state dry gas production Tuesday was 106.4 bcf/day (+1.0% y/y), according to BNEF. Lower-48 state gas demand Tuesday was 98.4 bcf/day (+9.1% y/y), according to BNEF. LNG net flows to US LNG export terminals Tuesday were 13.9 bcf/day (+2.8% 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 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 bullish for nat-gas prices since nat-gas inventories for the week ended January 24 fell -321 bcf, a larger draw than expectations of -316 bcf and a much bigger draw than the 5-year average draw for this time of year of -189 bcf. As of January 24, nat-gas inventories were down -3.3% y/y and were -4.1% below their 5-year seasonal average, signaling tight nat-gas supplies. In Europe, gas storage was 53% full as of February 2, below the 5-year seasonal average of 60% 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 31 fell -1 to 98 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).
