February Nymex natural gas (NGG26) on Tuesday closed down -0.014 (-0.35%),
Feb nat-gas on Tuesday gave up an early advance and settled lower after forecasts for warmer US weather signaled reduced heating demand for nat-gas and sparked long liquidation in nat-gas futures. Forecaster Atmospheric G2 said Tuesday that forecasts shifted warmer over much of the central and eastern US for January 4-8. Also, temperatures trended warmer over the eastern US for January 9-13.
Higher US nat-gas production is bearish for prices. The EIA on December 9 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 Tuesday was 112.9 bcf/day (+6.0% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 113.1 bcf/day (+41.4% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 19.8 bcf/day (+8.6% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported on December 10 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.
Monday's weekly EIA report, delayed from last Thursday, was slightly supportive for nat-gas prices, as nat-gas inventories for the week ended December 19 fell by -166 bcf, a smaller draw than the market consensus of -169 bcf but larger than the 5-year weekly average draw of -110 bcf. As of December 19, nat-gas inventories were down -3.3% y/y and were -0.7% below their 5-year seasonal average, signaling tight nat-gas supplies. As of December 28, gas storage in Europe was 64% full, compared to the 5-year seasonal average of 75% full for this time of year.
Baker Hughes reported Tuesday that the number of active US nat-gas drilling rigs in the week ending January 2 fell by -2 to 125 rigs, modestly below the 2.25-year high of 130 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.
