January Nymex natural gas (NGF26) on Tuesday closed down by -0.081 (-1.65%).
Jan nat-gas prices fell from a 3-year nearest-futures high on Tuesday and settled sharply lower. Long liquidation pressures emerged on Tuesday to knock nat-gas prices lower after updated US weather forecasts turned warmer, potentially reducing nat-gas heating demand. Forecaster Atmospheric G2 on Tuesday said that forecasts shifted warmer in the eastern and southern US for December 12-16.
Nat-gas prices were also weighed down by negative carryover from Tuesday’s slide in European nat-gas prices to a 1.5 year low.
Nat-gas prices initially rallied on Tuesday to a 3-year nearest-futures high after US weather forecasts projected below-normal temperatures in the Northeast and Great Lakes through the end of this week.
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.
US (lower-48) dry gas production on Tuesday was 112.7 bcf/day (+7.5% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 114.8 bcf/day (+1.5% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 17.6 bcf/day (-2.1% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported on November 19 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.
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 November 30, gas storage in Europe was 75% full, compared to the 5-year seasonal average of 86% 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.
