January Nymex natural gas (NGF26) on Thursday closed down by -0.116 (-2.88%).
Jan nat-gas prices gave up an early advance on Thursday and fell sharply after the weekly EIA nat-gas storage report showed a draw of less than expected. The EIA reported that nat-gas inventories fell -167 bcf for the week ended December 12, a smaller draw than expectations of -176 bcf. Nat-gas prices initially moved higher on Thursday after forecaster Vaisala said below-normal temperatures are expected in the eastern US for December 28-January 1, potentially boosting nat-gas heating demand.
On Tuesday, nat-gas prices fell to a 7-week low amid above-normal US temperatures, which curbed heating demand. Since posting a 3-year high on December 5, nat-gas prices have been in freefall as warmer US weather has curbed heating demand and allowed nat-gas storage to rebuild.
Higher US nat-gas production is also bearish for prices. Last 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.
US (lower-48) dry gas production on Thursday was 112.9 bcf/day (+8.8% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 90.9 bcf/day (-4.4% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 17.5 bcf/day (-3.6% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported last 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 slightly bearish for nat-gas prices, as nat-gas inventories for the week ended December 12 fell by -167 bcf, a smaller draw than the market consensus of -176 bcf but larger than the 5-year weekly average of -96 bcf. As of December 12, nat-gas inventories were down -1.2% y/y and were +0.9% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of December 16, gas storage in Europe was 69% full, compared to the 5-year seasonal average of 78% 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 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.
