Nat-Gas Prices Rise on Cool US Temps and Record LNG Exports

December Nymex natural gas (NGZ26) closed up +0.051 (+1.73%) on Friday.

Dec nat-gas prices climbed to a 1-week high on Friday and settled higher on prospects of colder US temperatures, which could boost heating demand for nat-gas.  The Commodity Weather Group said Friday that forecasts shifted cooler across the central and eastern US through November 20.

Ramped-up US nat-gas exports that shrink domestic stockpiles also supported prices Friday after LNG net flows to US LNG export terminals rose to a record 21.4 bcf/day, according to BNEF.

Last Monday, nat-gas prices sank to a 6.25-month nearest-futures low (X26) as warm US autumn weather has curbed heating demand for nat-gas and allowed US storage levels to climb. Also, expectations that the “Super El Niño” will bring warmer-than-normal temperatures to the Northern Hemisphere this winter and reduce nat-gas heating demand are weighing on prices. 

US (lower-48) dry gas production on Friday was 113.6 bcf/day (+3.2% y/y), according to BNEF.  Lower-48 state gas demand on Friday was 79.8 bcf/day (+3.6% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals Friday were a record 21.4 bcf/day (+5.6% w/w), according to BNEF.

As a positive factor for gas prices, the Edison Electric Institute reported Wednesday that US (lower-48) electricity output in the week ended October 31 rose +1.0% y/y to 74,445 GWh (gigawatt-hours).  Also, US electricity output in the 52 weeks ending October 31 rose +3.3% y/y to 4,423,346 GWh.

Thursday's weekly EIA report was bearish for nat-gas prices, showing an increase of +77 bcf in the week ended October 30, above the 5-year average of +61 bcf.  As of October 30, nat-gas inventories were down -2.9% y/y and +1.4% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of November 4, gas storage in Europe was 74% full, compared to the 5-year seasonal average of 90% full for this time of year.

Baker Hughes reported Friday that the number of active US nat-gas drilling rigs in the week ended November 6 rose by +1 to 131 rigs, just below the 3-year high of 135 rigs posted on September 25.