December Nymex natural gas (NGZ23) on Friday closed down -0.008 (-0.26%).
Nat-gas prices Friday posted a 2-week low and closed lower every day this week on the outlook for warmer than normal weather across the U.S. to reduce heating demand for nat gas. There was no significant change in Friday's 11-15 day weather forecast that calls for above-average temperatures to expand across the U.S., particularly in the central and eastern U.S.
Lower-48 state dry gas production Friday was 105.1 bcf/day (+5.1% y/y), according to BNEF. Lower-48 state gas demand Friday was 82 bcf/day (+17% y/y), according to BNEF. LNG net flows to U.S. LNG export terminals Friday were 14.8 bcf/day (+2.5% 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 100% full as of November 6, above the 5-year seasonal average of 90% full for this time of year. U.S. nat-gas inventories as of October 27 were +5.7% above their 5-year seasonal average.
An increase in U.S. electricity output is bullish for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total U.S. electricity output in the week ended November 4 rose +5.0% y/y to 72,785 GWh (gigawatt hours), although cumulative U.S. electricity output in the 52-week period ending November 4 fell -0.4% y/y to 4,097,883 GWh.
Due to a system upgrade, there was no weekly EIA nat-gas inventory report on Thursday. The EIA will publish two weeks of data next Thursday, November 16.
Last Thursday's EIA nat-gas inventories report for the week ended October 27 showed an increase of +79 bcf, which was right on the consensus of +79 bcf but above the 5-year average of +57 bcf. As of October 27, nat-gas inventories were up +7.9% y/y and were +5.7% 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 November 10 were unchanged at 118 rigs, modestly 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.
