February Nymex natural gas (NGG25) on Tuesday closed down sharply by -0.226 (-6.11%).
Feb nat-gas prices Tuesday fell sharply for a second day and posted a 2-1/2 week low. Nat-gas prices are under pressure as weather forecasts have warmed for most of the US for early next month, which will curb heating demand for nat-gas. Forecaster Maxar Technologies said Tuesday that the eastern half of the US will see above-normal temperatures for February 7-11.
Earlier this month, nat-gas prices soared to a 1-year nearest-futures high as an arctic blast sent temperatures plunging across the US, leading to a surge in heating demand and reducing inventories.
Lower-48 state dry gas production Tuesday was 104 bcf/day (-0.9% y/y), according to BNEF. Lower-48 state gas demand Tuesday was 102.7 bcf/day (+11% y/y), according to BNEF. LNG net flows to US LNG export terminals Tuesday were 14.3 bcf/day (+32.3% w/w), according to BNEF.
A decrease in US electricity output is negative for nat-gas demand from utility providers. The Edison Electric Institute reported last Thursday that total US (lower-48) electricity output in the week ended January 18 fell -7.35% y/y to 87,343 GWh (gigawatt hours), although US electricity output in the 52-week period ending January 18 rose +1.86% y/y to 4,181,320 GWh.
Last Thursday's weekly EIA report was slightly bearish for nat-gas prices since nat-gas inventories for the week ended January 17 fell -223 bcf, a smaller draw than expectations of -247 but a much bigger draw than the 5-year average draw for this time of year of -167 bcf. As of January 17, nat-gas inventories were up +1.3% y/y and were +0.7% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 56% full as of January 26, below the 5-year seasonal average of 63% 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 January 24 rose +1 to 99 rigs, modestly above the 3-1/2 year low from September 6 of 94 rigs. Active rigs have fallen since posting a 5-1/4 year high of 166 rigs in Sep 2022, up from the pandemic-era record low of 68 rigs posted in July 2020 (data since 1987).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.