December Nymex natural gas (NGZ25) on Tuesday closed down by -0.125 (-2.75%).
Dec nat-gas prices retreated on Tuesday amid warmer US weather forecasts for early next month, potentially reducing nat-gas heating demand. Forecaster Vaisala said Tuesday that forecasts shifted warmer across the US for December 5-9. Also, the liquidation of December nat-gas futures contracts weighed on prices, as the contracts expire on Tuesday.
Expectations of a smaller weekly EIA storage draw are another negative factor for gas prices. The consensus is that Wednesday's weekly EIA nat-gas inventories fell -9 bcf in the week ended November 21, a smaller draw than the five-year average for this time of year of -25 bcf.
Higher US nat-gas production is a bearish factor for prices. On November 12, 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 Tuesday was 111.2 bcf/day (+6.7% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 82.0 bcf/day (-1.5% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 18.2 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 November 15 rose +5.33% y/y to 75,586 GWh (gigawatt hours), and US electricity output in the 52-week period ending November 15 rose +2.9% y/y to 4,286,124 GWh.
Last Thursday's weekly EIA report was bullish for nat-gas prices, as nat-gas inventories for the week ended November 14 fell by -14 bcf, a larger draw than the market consensus of -12 bcf and well below the 5-year weekly average of a +12 bcf increase. As of November 14, nat-gas inventories were down -0.6% y/y and were +3.8% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of November 22, gas storage in Europe was 79% full, compared to the 5-year seasonal average of 89% 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 21 rose by +2 to 127 rigs, just below the 2.25-year high of 128 rigs from November 7. In the past year, the number of gas rigs has risen from the 4.5-year low of 94 rigs reported in September 2024.
