March Nymex natural gas (NGH25) on Thursday closed down by -0.123 (-3.88%).
Mar nat-gas prices Thursday tumbled to an 8-week low and settled sharply lower. Since posting a 1-year nearest-futures high two weeks ago, nat-gas prices have plummeted due to forecasts for warmer US weather, which curbs heating demand for nat-gas. Forecaster Maxar Technologies said Thursday that most US forecasts have shifted warmer for February 4-8.
Nat-gas prices retreated Thursday despite a bullish weekly inventory report. The EIA reported that nat-gas inventories fell by -321 bcf for the week ended January 24, more than expectations of -316 bcf and a much larger draw than the five-year average for this time of year of -189 bcf. US nat-gas inventories 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 Thursday was 105.4 bcf/day (+1.2% y/y), according to BNEF. Lower-48 state gas demand Thursday was 95.7 bcf/day (+1.0% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 14.5 bcf/day (+58.6% 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.
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 55% full as of January 28, below the 5-year seasonal average of 62% 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).
