January Nymex natural gas (NGF26) on Tuesday closed up +0.443 (+11.17%).
Jan nat-gas prices on Tuesday soared on heavy short-covering pressure after the plunge seen in mid-December. Tuesday's rally was sparked by colder forecasts for the East Coast. Xweather forecasted that a storm system will bring cold temperatures through the Midwest and Eastern seaboard by the end of December.
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 113.9 bcf/day (+9.6% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 87.9 bcf/day (-12.6% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 19.5 bcf/day (+4.9% 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.
Last 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 17, gas storage in Europe was 68% full, compared to the 5-year seasonal average of 78% full for this time of year.
Baker Hughes reported Tuesday that the number of active US nat-gas drilling rigs in the week ending December 26 remained unchanged at 127, just 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.
