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.
