Nat-Gas Prices Decline as US Weather Forecasts Turn Warmer

NG=F +2.30%

December Nymex natural gas (NGZ25) on Thursday closed down by -0.076 (-1.67%).

Dec nat-gas prices gave up an early advance on Thursday and settled lower as US weather forecasts turned warmer, which could dampen heating demand for nat-gas.  Forecaster Atmospheric G2 said Thursday that temperatures shifted warmer over the northern US for November 25-29, and turned warmer across the middle of the country for November 30-December 4.

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Nat-gas prices initially moved higher Thursday after weekly nat-gas storage declined more than expected.   EIA nat-gas inventories fell -14 bcf for the week ended November 14, more than expectations of -12 bcf and a bigger decline than the five-year average for a +12 bcf increase for the same period.

Higher US nat-gas production is also a bearish factor for prices.  Last Wednesday, 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 Thursday was 110.1 bcf/day (+7.6% y/y), according to BNEF.  Lower-48 state gas demand on Thursday was 84.6 bcf/day (+1.2y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Thursday were 17.4 bcf/day (-2.2% w/w), according to BNEF.

As a supportive factor for gas prices, the Edison Electric Institute reported 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.

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 18, gas storage in Europe was 81% full, compared to the 5-year seasonal average of 90% 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 14 fell by -3 to 125 rigs, falling back from a 2.25-year high of 128 rigs on 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.

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. This article was originally published on Barchart.com