March Nymex natural gas (NGH25) on Wednesday closed up by +0.107 (+3.29%).
Mar nat-gas prices Wednesday settled moderately higher on expectations of colder US temperatures, which will boost heating demand for nat-gas. Forecaster Maxar Technologies said Wednesday that it expects below-normal temperatures across the northern half of the US for February 15-19.
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. The consensus is that Thursday's weekly EIA nat-gas inventories will decline by -171 bcf.
Lower-48 state dry gas production Wednesday was 107.2 bcf/day (+1.8% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 100.7 bcf/day (+5.3% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 14.7 bcf/day (+8.1% 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 February 1 rose +6.2% y/y to 81,767 GWh (gigawatt hours), and US electricity output in the 52-week period ending February 1 rose +2.5% y/y to 4,203,156 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).
