February Nymex natural gas (NGG26) on Thursday closed up by +0.008 (+0.26%),
Feb nat-gas prices recovered from a 3-month nearest-futures low on Thursday and settled slightly higher as forecasts for below-normal US weather that could potentially boost heating demand, sparked short covering in nat-gas futures. Forecaster Atmospheric G2 said Thursday that forecasts shifted colder over parts of the central and eastern US for January 20-24.
Nat-gas prices initially fell to a 3-month low on Thursday on a bearish weekly EIA inventory report. The EIA reported that nat-gas inventories fell -71 bcf in the week ended January 9, a smaller draw than expectations of -91 bcf and much smaller than the five-year average for this time of year at -146 bcf.
Nat-gas prices are also under pressure, as feedgas to Cheniere's Corpus Christi LNG export facility and the Freeport LNG export terminals along the Texas Gulf Coast have been below normal levels this week due to electrical and piping issues. The reduced capacity at the export terminals allows US nat-gas storage levels to build, a bearish factor for prices.
As a negative factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended January 10 fell -13.15% y/y to 79,189 GWh (gigawatt hours), although US electricity output in the 52-week period ending January 10 rose +2.5% y/y to 4,294,613 GWh.
Projections for lower US nat-gas production are supportive for prices. The EIA on Tuesday cut its forecast for 2026 US dry nat-gas production to 107.4 bcf/day from last month's estimate of 109.11 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 Thursday was 112.0 bcf/day (+7.8% y/y), according to BNEF. Lower-48 state gas demand on Thursday was 114.1 bcf/day (-3.2% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Thursday were 17.9 bcf/day (-6.1% w/w), according to BNEF.
Thursday's weekly EIA report was bearish for nat-gas prices, as nat-gas inventories for the week ended January 9 fell by -71 bcf, a smaller draw than the market consensus of -91 bcf and well below the 5-year weekly average draw of -146 bcf. As of January 9, nat-gas inventories were up +2.2% y/y and were +3.4% above their 5-year seasonal average, signaling ample nat-gas supplies. As of January 13, gas storage in Europe was 52% full, compared to the 5-year seasonal average of 68% 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 9 fell by -1 to 124 rigs, modestly 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.
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.
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