January Nymex natural gas (NGF26) on Friday closed down by -0.118 (-2.79%).
Jan nat-gas prices extended this week's sharp sell-off on Friday, sinking to a 6-week low. US weather forecasts calling for warmer-than-normal temperatures across a large part of the country will potentially reduce heating demand and have sparked long liquidation pressures in nat-gas futures. Forecaster Atmospheric G2 said Friday that above-normal temperatures are forecast to expand over the western, central, and southern US for December 17-21, and widespread above-average warmth is forecast over the southern half of the country for December 22-26.
Higher US nat-gas production is also bearish for prices. On Tuesday, the EIA raised its forecast for 2025 US nat-gas production to 107.74 bcf/day from its November estimate of 107.70 bcf/day. US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.
Last Friday, nat-ga prices rallied to a nearly 3-year nearest-futures high as late-autumn temperatures have remained well below normal and are expected to persist in the near term, boosting heating demand and shrinking nat-gas storage levels.
US (lower-48) dry gas production on Friday was 112.5 bcf/day (+7.1% y/y), according to BNEF. Lower-48 state gas demand on Friday was 110.6 bcf/day (-3.4% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Friday were 18.1 bcf/day (-3.0% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended December 6 rose +2.3% y/y to 85,330 GWh (gigawatt hours), and US electricity output in the 52-week period ending December 6 rose +2.84% y/y to 4,291,665 GWh.
Thursday's weekly EIA report was bullish for nat-gas prices, as nat-gas inventories for the week ended December 5 fell by -177 bcf, a larger draw than the market consensus of -170 bcf and than the 5-year weekly average of -89 bcf. As of December 5, nat-gas inventories were down unchanged y/y and were +2.8% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of December 10, gas storage in Europe was 71% full, compared to the 5-year seasonal average of 81% 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 12 fell by -2 to 127 rigs, just below the 2.25-year high of 130 rigs set on November 28. In the past year, the number of gas rigs has risen from the 4.5-year low of 94 rigs reported in September 2024.
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.
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