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March Nymex natural gas (NGH25) on Thursday closed down by -0.123 (-3.88%).
Mar nat-gas prices Thursday tumbled to an 8-week low and settled sharply lower. Since posting a 1-year nearest-futures high two weeks ago, nat-gas prices have plummeted due to forecasts for warmer US weather, which curbs heating demand for nat-gas. Forecaster Maxar Technologies said Thursday that most US forecasts have shifted warmer for February 4-8.
Nat-gas prices retreated Thursday despite a bullish weekly inventory report. The EIA reported that nat-gas inventories fell by -321 bcf for the week ended January 24, more than expectations of -316 bcf and a much larger draw than the five-year average for this time of year of -189 bcf. US nat-gas inventories are now -4.1% below the five-year average for this time of year, the first time supplies have been below the five-year average in 2 years.
Lower-48 state dry gas production Thursday was 105.4 bcf/day (+1.2% y/y), according to BNEF. Lower-48 state gas demand Thursday was 95.7 bcf/day (+1.0% y/y), according to BNEF. LNG net flows to US LNG export terminals Thursday were 14.5 bcf/day (+58.6% w/w), according to BNEF.
An increase in US electricity output is positive for nat-gas demand from utility providers. The Edison Electric Institute reported Wednesday that total US (lower-48) electricity output in the week ended January 25 rose +21.3% y/y to 97,259 GWh (gigawatt hours), and US electricity output in the 52-week period ending January 24 rose +2.25% y/y to 4,198,401 GWh.
Thursday's weekly EIA report was bullish for nat-gas prices since nat-gas inventories for the week ended January 24 fell -321 bcf, a larger draw than expectations of -316 bcf and a much bigger draw than the 5-year average draw for this time of year of -189 bcf. As of January 24, nat-gas inventories were down -3.3% y/y and were -4.1% below their 5-year seasonal average, signaling tight nat-gas supplies. In Europe, gas storage was 55% full as of January 28, below the 5-year seasonal average of 62% 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.