Nat-Gas Prices Sharply Higher on the Outlook for Colder US Temps
December Nymex natural gas (NGZ24) on Wednesday closed sharply higher by +0.195 (+6.50%)
Dec nat-gas prices Wednesday extended this week's sharp rally to a 10-month nearest-futures high. The outlook for sharply colder temperatures toward the end of the month that will boost heating demand for nat-gas is pushing prices sharply higher. Forecaster Atmospheric G2 said Wednesday that forecasts shifted colder for the central and eastern US with a risk of a polar blast of temperatures for the November 25-29 period.
Lower-48 state dry gas production Wednesday was 101.8 bcf/day (-3.9% y/y), according to BNEF. Lower-48 state gas demand Wednesday was 79.3 bcf/day (-3.0% y/y), according to BNEF. LNG net flows to US LNG export terminals Wednesday were 14.1 bcf/day (+3.9% 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 November 16 rose +2.06% y/y to 7,764 GWh (gigawatt hours), and US electricity output in the 52-week period ending November 16 rose +1.8% y/y to 4,165,449 GWh.
The consensus is for Thursday's weekly EIA nat-gas inventories to climb by +21 bcf the week ended November 15, well above the five-year average for a draw of -16 bcf for this time of year.
Last Thursday's weekly EIA report was bearish for nat-gas prices since nat-gas inventories for the week ended November 8 rose +41 bcf, above expectations of +39 bcf and well above the 5-year average build for this time of year of +29 bcf. As of November 8, nat-gas inventories were up +3.7% y/y and were +6.1% above their 5-year seasonal average, signaling ample nat-gas supplies. In Europe, gas storage was 93% full as of November 10, slightly above the 5-year seasonal average of 92% 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 15 fell -1 rig to 101 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.