December Nymex natural gas (NGZ25) on Tuesday closed up +0.077 (+1.80%).
Dec nat-gas prices extended their week-long rally on Tuesday to a 7.75-month nearest-futures high. The outlook for colder US weather, which will boost nat-gas heating demand, is bullish for nat-gas prices. Forecaster Atmospheric G2 said Tuesday that forecasts shifted colder across the southern US for November 9-13.
US (lower-48) dry gas production on Tuesday was 110.2 bcf/day (+8.5% y/y), according to BNEF. Lower-48 state gas demand on Tuesday was 77.4 bcf/day (+3.7% y/y), according to BNEF. Estimated LNG net flows to US LNG export terminals on Tuesday were 17.2 bcf/day (+9.3% w/w), according to BNEF.
As a supportive factor for gas prices, the Edison Electric Institute reported last Wednesday that US (lower-48) electricity output in the week ended October 25 rose +1.9% y/y to 72,772 GWh (gigawatt hours), and US electricity output in the 52-week period ending October 25 rose +2.9% y/y to 4,282,176 GWh.
Higher US nat-gas production is a bearish factor for prices. On October 7, the EIA raised its forecast for 2025 US nat-gas production by +0.5% to 107.14 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.
Last Thursday's weekly EIA report was neutral for nat-gas prices since nat-gas inventories for the week ended October 24 rose +74 bcf, right on the market consensus, but above the 5-year weekly average of +67 bcf. As of October 24, nat-gas inventories were up +0.5% y/y and were +4.6% above their 5-year seasonal average, signaling adequate nat-gas supplies. As of November 2, gas storage in Europe was 83% full, compared to 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 October 31 rose by +4 to a 2.25-year high of 125 rigs. 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.
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