January Nymex natural gas (NGF25) on Friday closed up +0.116 (+3.52%), adding to Thursday's rally of +5.81%.
Jan nat-gas prices rallied sharply on Friday and extended this week's rally to a 1-month high. Prices rallied on the prospects for colder US temperatures that would boost heating demand for nat-gas. EBW AnalyticsGroup said the longer-range weather outlook is for a mid-January cold spell in the southern US that could lead to freeze-offs and nat-gas production disruptions.
Lower-48 state dry gas production Friday was 104.7 bcf/day (-1.7% y/y), according to BNEF. Lower-48 state gas demand Friday was 103.9 bcf/day (+5.8% y/y), according to BNEF. LNG net flows to US LNG export terminals Friday were 14.6 bcf/day (+8.8% 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 Wednesday that total US (lower-48) electricity output in the week ended December 14 rose +2.97% y/y to 80,641 GWh (gigawatt hours), and US electricity output in the 52-week period ending December 14 rose +2.02% y/y to 4,175,618 GWh.
Thursday's weekly EIA report was slightly bullish for nat-gas prices since nat-gas inventories for the week ended December 13 fell -125 bcf, right on expectations but a much larger draw than the 5-year average draw for this time of year of -92 bcf. As of December 13, nat-gas inventories were up +1.3% y/y and were +3.8% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 77% full as of December 17, below the 5-year seasonal average of 80% full for this time of year.
Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ending December 20 fell -1 rig to 102 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).
