January Nymex natural gas (NGF26) on Wednesday closed up by +0.155 (+3.20%).

Jan nat-gas prices rallied sharply on Wednesday and posted a nearly 3-year nearest-futures high.   Weather forecasts of colder-than-normal weather in the US, which will boost nat-gas heating demand, have sparked fund buying of nat-gas futures on Wednesday.   Forecaster Atmospheric G2 said below-normal temperatures in the Northeast and Great Lakes will last through the end of this week and return after the middle of the month.  Nat-gas prices added to their gains Wednesday on technical buying after prices rose above $5.00 per million British thermal units.

US (lower-48) dry gas production on Wednesday was 112.0 bcf/day (+6.4% y/y), according to BNEF.  Lower-48 state gas demand on Wednesday was 113.1 bcf/day (+2.6% y/y), according to BNEF.  Estimated LNG net flows to US LNG export terminals on Wednesday were 17.5 bcf/day (-4.9% w/w), according to BNEF.

As a supportive factor for gas prices, the Edison Electric Institute reported on Wednesday that US (lower-48) electricity output in the week ended November 29 rose +2.11% y/y to 76,459 GWh (gigawatt hours), and US electricity output in the 52-week period ending November 29 rose +2.99% y/y to 4,289,746 GWh.

Higher US nat-gas production is a bearish factor for prices.  On November 12, 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.

The consensus is that Thursday’s weekly EIA nat-gas inventories will decline by -18 bcf for the week ended November 28.

Last Wednesday’s weekly EIA report was bullish for nat-gas prices, as nat-gas inventories for the week ended November 21 fell by -11 bcf, a larger draw than the market consensus of -9 bcf but less than the 5-year weekly average of a -25 bcf draw.  As of November 21, nat-gas inventories were down -0.8% y/y and were +4.2% above their 5-year seasonal average, signaling adequate nat-gas supplies.  As of December 1, gas storage in Europe was 75% full, compared to the 5-year seasonal average of 85% full for this time of year.

Baker Hughes reported last Wednesday that the number of active US nat-gas drilling rigs in the week ending November 28 rose by +3 to 130 rigs, a 2.25-year high.  In the past year, the number of gas rigs has risen from the 4.5-year low of 94 rigs reported in September 2024.
 

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