January Nymex natural gas (NGF24) on Friday closed up +0.012 (+0.43%).
Nat-gas prices Friday shook off early losses and moved higher, as a weaker dollar sparked short covering in nat-gas futures. Nat-gas prices this week have been under pressure from the outlook for above-average U.S. temperatures, which will reduce heating demand for nat-gas. Forecaster Maxar Technologies said weather forecasts for much of the U.S. from Dec 6-10 show above-normal temperatures sweeping across the western to the central parts of the country. Also, most of the U.S. is seeing weather forecasts shifting warmer from Dec 11-15.
Lower-48 state dry gas production Friday was 104.9 bcf/day (+4.2% y/y), according to BNEF. Lower-48 state gas demand Friday was 89.6 bcf/day (-9.0% y/y), according to BNEF. LNG net flows to U.S. LNG export terminals Friday were 14.5 bcf/day (-1.2% w/w), according to BNEF.
High inventories caused by carryover from the mild 2022/23 winter and weak heating demand have undercut nat-gas prices. Gas storage across Europe was 97% full as of November 26, above the 5-year seasonal average of 86% full for this time of year. U.S. nat-gas inventories as of November 24 were +8.6% above their 5-year seasonal average.
A decline in U.S. electricity output is bearish for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total U.S. electricity output in the week ended November 25 fell -2.4% y/y to 71,126 GWh (gigawatt hours), and cumulative U.S. electricity output in the 52-week period ending November 25 fell -0.7% y/y to 4,090,180 GWh.
Thursday's weekly EIA report was bearish for nat-gas prices as nat-gas inventories for the week ended November 24 unexpectedly rose +10 bcf versus expectations of a -6 bcf decline and a 5-year average draw of -44 bcf. As of November 24, nat-gas inventories were up +10.1% y/y and were +8.6% above their 5-year seasonal average, signaling ample nat-gas supplies.
Baker Hughes reported Friday that the number of active U.S. nat-gas drilling rigs in the week ended December 1 fell -1 rig to 116 rigs, just above the 19-month low of 113 rigs posted September 8. Active rigs this year have fallen back after climbing to a 4-year high of 166 rigs in Sep 2022 from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
