December Nymex natural gas (NGZ25) on Thursday closed up by +0.113 (+2.49%).
Dec nat-gas prices extended their month-long rally on Thursday to a new 8-month nearest-futures high. Forecasts for colder US temperatures at the end of this month will increase heating demand for nat-gas and are pushing prices higher. Forecaster Atmospheric G2 said Thursday that forecasts shifted cooler in the western half of the US in the November 18-22 period and turned colder for November 23-27.
Higher US nat-gas production is a bearish factor for prices. On Wednesday, the EIA raised its forecast for 2025 US nat-gas production by +1.0% to 107.67 bcf/day from September's estimate of 106.60 bcf/day. US nat-gas production is currently near a record high, with active US nat-gas rigs recently posting a 2-year high.
US (lower-48) dry gas production on Thursday was 109.7 bcf/day (+7.3% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 82.7 bcf/day (-1.2% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 17.8 bcf/day (+8.9% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported Thursday that US (lower-48) electricity output in the week ended November 8 rose +0.12% y/y to 73,383 GWh (gigawatt hours), and US electricity output in the 52-week period ending November 8 rose +2.84% y/y to 4,282,302 GWh.
The consensus is that Friday's EIA nat-gas inventories will increase by +34 bcf for the week ended November 7, close to the five-year average of +35 bcf. The report will be released a day later due to Tuesday's Veterans' Day holiday.
Last Thursday's weekly EIA report was neutral for nat-gas prices since nat-gas inventories for the week ended October 31 rose +33 bcf, right on the market consensus, but below the 5-year weekly average of +42 bcf. As of October 31, nat-gas inventories were up +0.4% y/y and were +4.3% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of November 10, gas storage in Europe was 82% full, compared to the 5-year seasonal average of 91% 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 November 7 rose by +3 to a 2.25-year high of 128 rigs. In the past year, the number of gas rigs has risen from the 4.5-year low of 94 rigs reported in September 2024.
