Nat-Gas Prices Soar as US Temps Plunge

January Nymex natural gas (NGF26) on Monday closed up +0.321 (+7.35%),

January nat-gas on Monday rallied sharply to a 3-week high on the outlook for colder US temperatures, which are expected to boost heating demand for nat-gas.  Forecaster Atmospheric G2 said that colder-than-normal temperatures are expected across the Northeast for January 3-7.  

Nat-gas prices remained sharply higher after weekly storage figures from the EIA showed nat-gas inventories fell -166 bcf for the week ended December 19, a larger decline than the five-year average of -110 bcf for the week.

Higher US nat-gas production is bearish for prices.  The EIA on December 9 raised its forecast for 2025 US nat-gas production to 107.74 bcf/day from its November estimate of 107.70 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 Monday was 113.7 bcf/day (+6.9% y/y), according to BNEF.  Lower-48 state gas demand on Monday was 103.8 bcf/day (+34.1% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Monday were 19.8 bcf/day (+5.3% w/w), according to BNEF.

As a supportive factor for gas prices, the Edison Electric Institute reported on December 10 that US (lower-48) electricity output in the week ended December 6 rose +2.3% y/y to 85,330 GWh (gigawatt hours), and US electricity output in the 52-week period ending December 6 rose +2.84% y/y to 4,291,665 GWh.

Monday's weekly EIA report, delayed from last Thursday, was slightly supportive for nat-gas prices, as nat-gas inventories for the week ended December 19 fell by -166 bcf, a smaller draw than the market consensus of -169 bcf but larger than the 5-year weekly average draw of -110 bcf.  As of December 19, nat-gas inventories were down -3.3% y/y and were -0.7% below their 5-year seasonal average, signaling tight nat-gas supplies.  As of December 27, gas storage in Europe was 64% full, compared to the 5-year seasonal average of 75% full for this time of year.

Baker Hughes reported last Tuesday that the number of active US nat-gas drilling rigs in the week ending December 26 remained unchanged at 127, just 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.